IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v8y2008i1n21.html
   My bibliography  Save this article

Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds

Author

Listed:
  • Kirkegaard Rene

    (Brock University, rkirkegaard@brocku.ca)

Abstract

Comparative statics for all-pay auctions with two heterogeneous and privately informed bidders are analyzed. General results are provided for when one bidder becomes stochastically weaker. The comparative statics are fully characterized for truncations. Moreover, we show that expected revenue may increase when one bidder weakens. In the second part of the paper we consider a dynamic contest in which beliefs change endogenously: the first bidder may preempt the auction by paying a bribe. An all-pay auction is held if the bribe is not paid, in which case the second bidder revises his beliefs. With the option to bribe, expected payoff decreases for a set of types of at least one bidder, possibly the bidder ostensibly advantaged by the preemption option. However, the expected revenue and the ex ante payoff of both bidders may improve.

Suggested Citation

  • Kirkegaard Rene, 2008. "Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-32, September.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:21
    DOI: 10.2202/1935-1704.1417
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1704.1417
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1704.1417?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Burguet Roberto & Perry Martin K, 2007. "Bribery and Favoritism by Auctioneers in Sealed-Bid Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-27, June.
    2. Nicolas Sahuguet, 2006. "Caps in asymmetric all-pay auctions with incomplete information," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-8.
    3. Kong-Pin Chen, 2005. "External Recruitment as an Incentive Device," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 259-278, April.
    4. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    5. Hopkins Ed & Kornienko Tatiana, 2007. "Cross and Double Cross: Comparative Statics in First Price and All Pay Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-25, May.
    6. Chan, William, 1996. "External Recruitment versus Internal Promotion," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 555-570, October.
    7. 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.
    8. Ed Hopkins & Tatiana Kornienko, 2007. "Cross and Double Cross: Comparative Statics in First Price Auctions," Levine's Bibliography 321307000000000831, UCLA Department of Economics.
    9. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    10. PARREIRAS, Sérgio O. & RUBINCHIK-PESSACH, Anna, 2006. "Contests with heterogeneous agents," LIDAM Discussion Papers CORE 2006004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zheng, Charles Z., 2019. "Necessary and sufficient conditions for peace: Implementability versus security," Journal of Economic Theory, Elsevier, vol. 180(C), pages 135-166.
    2. Kirkegaard, René, 2012. "Favoritism in asymmetric contests: Head starts and handicaps," Games and Economic Behavior, Elsevier, vol. 76(1), pages 226-248.
    3. Ivan Pastine & Tuvana Pastine, 2023. "Equilibrium existence and expected payoffs in all-pay auctions with constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(4), pages 983-1007, May.
    4. Kräkel, Matthias & Szech, Nora & von Bieberstein, Frauke, 2014. "Externalities in recruiting," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 123-135.
    5. Ivan Pastine & Tuvana Pastine, 2012. "All-pay contests with constraints," Working Papers 201204, School of Economics, University College Dublin.
    6. Costas Roumanias, 2008. "Auctioning Public Office," Discussion Paper Series 2008_08, Department of Economics, University of Macedonia, revised Sep 2008.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. René Kirkegaard, 2007. "Comparative Statics and Welfare in Heterogeneous Contests: Bribes, Caps, and Performance Thresholds," Working Papers 0702, Brock University, Department of Economics.
    2. Rene Kirkegaard, 2008. "Favoritism in Contests: Head Starts and Handicaps," Working Papers 0805, Brock University, Department of Economics, revised Nov 2008.
    3. Kirkegaard, René, 2012. "Favoritism in asymmetric contests: Head starts and handicaps," Games and Economic Behavior, Elsevier, vol. 76(1), pages 226-248.
    4. E. Feess & Gerd Muehlheusser & M. Walzl, 2008. "Unfair contests," Journal of Economics, Springer, vol. 93(3), pages 267-291, April.
      • Feess, E. & Muehlheusser, G. & Walzl, M., 2004. "Unfair contests," Research Memorandum 048, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    5. Häfner, Samuel, 2017. "A tug-of-war team contest," Games and Economic Behavior, Elsevier, vol. 104(C), pages 372-391.
    6. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    7. Thomas Giebe & Paul Schweinzer, 2014. "All-pay-all aspects of political decision making," Public Choice, Springer, vol. 161(1), pages 73-90, October.
    8. Helene Mass & Nicolas Fugger & Vitali Gretschko & Achim Wambach, 2020. "Imitation Perfection—A Simple Rule to Prevent Discrimination in Procurement," American Economic Journal: Microeconomics, American Economic Association, vol. 12(3), pages 189-245, August.
    9. Kirkegaard, René, 2009. "Asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1617-1635, July.
    10. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    11. Ed Hopkins, 2007. "Rank-Based Methods for the Analysis of Auctions," Edinburgh School of Economics Discussion Paper Series 173, Edinburgh School of Economics, University of Edinburgh.
    12. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    13. Mares, Vlad & Swinkels, Jeroen M., 2014. "On the analysis of asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 152(C), pages 1-40.
    14. Kräkel, Matthias & Szech, Nora & von Bieberstein, Frauke, 2014. "Externalities in recruiting," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 123-135.
    15. Johannes Münster, 2007. "Selection Tournaments, Sabotage, and Participation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 943-970, December.
    16. de Castro, Luciano I. & de Frutos, María-Angeles, 2010. "How to translate results from auctions to procurements," Economics Letters, Elsevier, vol. 106(2), pages 115-118, February.
    17. Aner Sela, 2016. "Two Stage Contests With Effort-Dependent Rewards," Working Papers 1612, Ben-Gurion University of the Negev, Department of Economics.
    18. Kirkegaard, René, 2013. "Incomplete information and rent dissipation in deterministic contests," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 261-266.
    19. Yizhaq Minchuk & Aner Sela, 2020. "Contests with insurance," Review of Economic Design, Springer;Society for Economic Design, vol. 24(1), pages 1-22, June.
    20. Münster, Johannes, 2006. "Selection Tournaments, Sabotage, and Participation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 118, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.