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Reserve prices in all-pay auctions with complete information

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  • Bertoletti, Paolo

Abstract

We introduce reserve prices in the literature concerning all-pay auctions with complete information, and reconsider the case for the so-called Exclusion Principle (namely, the fact that the seller may find it in her best interest to exclude the bidders with the largest willingness to pay for the prize). We show that a version of it extends to our setting. However, we also show that the Exclusion Principle: (a) does not apply if the reserve price is large enough; (b) does not extend if the seller regards bidders’ valuations as identically independently distributed according to a monotonic hazard rate. Preliminary results for the case of independent ex-ante asymmetric bidders suggest that the case for it in settings with positive reserve prices is actually tenuous.

Suggested Citation

  • Bertoletti, Paolo, 2016. "Reserve prices in all-pay auctions with complete information," Research in Economics, Elsevier, vol. 70(3), pages 446-453.
    • Handle: RePEc:eee:reecon:v:70:y:2016:i:3:p:446-453
    DOI: 10.1016/j.rie.2016.06.001
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    Cited by:

    1. Oliver Kirchkamp & Wladislaw Mill, 2019. "Spite vs. risk: explaining overbidding," CESifo Working Paper Series 7631, CESifo.
    2. Subhasish M. Chowdhury, 2017. "The All‐Pay Auction with Nonmonotonic Payoff," Southern Economic Journal, John Wiley & Sons, vol. 84(2), pages 375-390, October.
    3. Shelegia, Sandro & Wilson, Chris M., 2022. "Costly participation and default allocations in all-pay contests," MPRA Paper 115027, University Library of Munich, Germany.
    4. Gregory Pavlov, 2013. "Correlated Equilibria and Communication Equilibria in All-pay Auctions," University of Western Ontario, Departmental Research Report Series 20132, University of Western Ontario, Department of Economics.
    5. Kirchkamp, Oliver & Mill, Wladislaw, 2021. "Spite vs. risk: Explaining overbidding in the second-price all-pay auction," Games and Economic Behavior, Elsevier, vol. 130(C), pages 616-635.
    6. Etro, Federico, 2017. "Research in economics and game theory. A 70th anniversary," Research in Economics, Elsevier, vol. 71(1), pages 1-7.

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