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Semi-targeted all-pay auctions: A partial exclusion principle

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  • Dahm, Matthias

Abstract

This paper studies the effects of a specific affirmative action policy in complete information all-pay auctions when players differ in ability. The contest organizer splits the overall prize of the competition into a targeted and an untargeted prize. The targeted prize is exclusively for disadvantaged (low-ability) agents and excludes advantaged agents partially from the overall prize. We consider a setting with one high-ability and two low-ability contestants and fully characterize equilibrium. Assuming that the contest organizer aims to maximize expected total effort, we show that (i) almost any targeted prize is preferable to a standard all-pay auction without targeted prize; (ii) the exclusion principle Baye et al. (1993) can be implemented by a wide range of sufficiently large targeted prizes; and (iii) partial exclusion by means of an appropriately chosen targeted prize benefits the organizer more than complete exclusion. We also discuss the robustness of our results in settings with more than three agents.

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  • Dahm, Matthias, 2018. "Semi-targeted all-pay auctions: A partial exclusion principle," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 256-282.
    • Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:256-282
    DOI: 10.1016/j.ijindorg.2018.09.003
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    Cited by:

    1. Christoph March & Marco Sahm, 2019. "The Perks of Being in the Smaller Team: Incentives in Overlapping Contests," CESifo Working Paper Series 7994, CESifo.
    2. Alexander Matros & David Rietzke, 2024. "Contests on networks," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(3), pages 815-841, November.
    3. Chen Cohen & David Lagziel & Ofer Levi & Aner Sela, 2020. "All-Pay Auctions With Heterogeneous Prizes And Partially Asymmetric Players," Working Papers 2010, Ben-Gurion University of the Negev, Department of Economics.
    4. 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.
    5. Cohen, Chen & Lagziel, David & Levi, Ofer & Sela, Aner, 2023. "The role of the second prize in all-pay auctions with two heterogeneous prizes," Journal of Mathematical Economics, Elsevier, vol. 105(C).
    6. Lauber, Arne & March, Christoph & Sahm, Marco, 2023. "Optimal and fair prizing in sequential round-robin tournaments: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 141(C), pages 30-51.

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    More about this item

    Keywords

    Asymmetric contests; Multi-prize contests; Affirmative action; Discrimination; Prize structure; Exclusion principle;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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