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All-Pay Auctions With Asymmetric Effort Constraints

Author

Listed:
  • Chen Cohen

    (Department of Management and Economics, The Open University of Israel, Israel)

  • Ofer Levi

    (Department of Mathematics and Computer Science, The Open University of Israel, Israel)

  • Aner Sela

    (BGU)

Abstract
We study all-pay auctions with discrete strategy sets and analyze the equilibrium strategies when players have asymmetric values of winning as well as asymmetric effort constraints. We prove that for any number of players if one of them has the highest effort constraint then, independent of the players’ values of winning, he is the only player with a positive expected payoff. However, when two players have the same highest effort constraint then they do not necessarily have the highest expected payoffs. By several examples we show a significant distinction between the equilibrium strategies of two players and a larger number of players, particularly when the player with the highest effort constraint is not unique.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Chen Cohen & Ofer Levi & Aner Sela, 2017. "All-Pay Auctions With Asymmetric Effort Constraints," Working Papers 1706, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:1706
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    File URL: http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/1706.pdf
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    References listed on IDEAS

    as
    1. Szech, Nora, 2015. "Tie-breaks and bid-caps in all-pay auctions," Games and Economic Behavior, Elsevier, vol. 92(C), pages 138-149.
    2. Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymyr, 2006. "Caps on bidding in all-pay auctions: Comments on the experiments of A. Rapoport and W. Amaldoss," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 276-283, October.
    3. Michael R. Baye & Dan Kovenock & Casper G. Vries, 1996. "The all-pay auction with complete information," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 209-223, Springer.
    4. Arye Hillman & Dov Samet, 1987. "Dissipation of contestable rents by small numbers of contenders," Public Choice, Springer, vol. 54(1), pages 63-82, January.
    5. Arieh Gavious & Benny Moldovanu & Aner Sela, 2002. "Bid Costs and Endogenous Bid Caps," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 709-722, Winter.
    6. Yeon-Koo Che & Ian L. Gale, 2008. "Caps on Political Lobbying," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 337-345, Springer.
    7. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1994. "The Solution to the Tullock Rent-Seeking Game When R Is Greater Than 2: Mixed-Strategy Equilibria and Mean Dissipation Rates," Public Choice, Springer, vol. 81(3-4), pages 363-380, December.
    8. Cohen Chen & Sela Aner, 2007. "Contests with Ties," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-18, December.
    9. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    10. Sergiu Hart, 2014. "Allocation Games with Caps: From Captain Lotto to All-Pay Auctions," Discussion Paper Series dp670, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    11. Maskin, Eric S., 2000. "Auctions, development, and privatization: Efficient auctions with liquidity-constrained buyers," European Economic Review, Elsevier, vol. 44(4-6), pages 667-681, May.
    12. Che, Yeon-Koo & Gale, Ian, 1996. "Expected revenue of all-pay auctions and first-price sealed-bid auctions with budget constraints," Economics Letters, Elsevier, vol. 50(3), pages 373-379, March.
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    Cited by:

    1. Aner Sela, 2018. "Reverse Contests," Working Papers 1804, Ben-Gurion University of the Negev, Department of Economics.
    2. He, Simin, 2019. "Minority advantage and disadvantage in competition and coordination," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 464-482.

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    More about this item

    Keywords

    All-pay auctions; asymmetric effort constraints; asymmetric players; weakly asymmetric players;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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