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Sequential elimination in multi-stage all-pay auctions

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  • Robertson, Matthew J.

Abstract

I study a multi-stage all-pay auction in which the lowest bidder in each stage is eliminated. Elimination continues until only two bidders remain, one of whom wins the auction. I analyse optimal bidding behaviour and the seller’s expected revenue when bidders have independent and private values. In contrast to typical bidding strategies, the optimal bid in each stage is strictly decreasing in the number of bidders. For a fixed number of bidders, however, bids increase as bidders progress through the stages of the auction. Despite independent values, this multi-stage auction yields less expected revenue to the seller than its single-stage counterpart when there are more than three bidders.

Suggested Citation

  • Robertson, Matthew J., 2024. "Sequential elimination in multi-stage all-pay auctions," Economics Letters, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:ecolet:v:241:y:2024:i:c:s0165176524003112
    DOI: 10.1016/j.econlet.2024.111827
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    More about this item

    Keywords

    All-pay auctions; Elimination stages; Expected revenue; Bidding strategies;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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