IDEAS home Printed from https://ideas.repec.org/p/cor/louvco/2009059.html
   My bibliography  Save this paper

All-pay auctions with endogenous rewards

Author

Listed:
  • BOS, Olivier

    (PSE-Paris School of Economics, France)

  • RANGER, Martin

    (University of Bonn, Germany)

Abstract

This paper examines a perfectly discriminating contest (all-pay auction) with two asymmetric players. Valuations are endogenous and depend on the effort each player invests in the contest. The shape of the valuation function is common knowledge and differs between the contestants. Some key properties of R&D races, lobbying activity and sport contests are captured by this framework. Once the unique equilibrium in mixed strategies analyzed, we derive a closed form of the expected expenditure of both players. We characterize the expected expenditure by the means of incomplete Beta functions. We focus on unordered valuations.

Suggested Citation

  • BOS, Olivier & RANGER, Martin, 2009. "All-pay auctions with endogenous rewards," LIDAM Discussion Papers CORE 2009059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2009059
    as

    Download full text from publisher

    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2009.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:bla:jindec:v:50:y:2002:i:4:p:417-30 is not listed on IDEAS
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Subhashish Modak Chowdhury, 2009. "The all-pay auction with non-monotonic payoff," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-09, School of Economics, University of East Anglia, Norwich, UK..
    4. 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.
    5. Chen Cohen & Todd R. Kaplan & Aner Sela, 2008. "Optimal rewards in contests," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 434-451, June.
    6. Amegashie, J. Atsu, 2001. "An all-pay auction with a pure-strategy equilibrium," Economics Letters, Elsevier, vol. 70(1), pages 79-82, January.
    7. Kaplan, Todd R. & Luski, Israel & Wettstein, David, 2003. "Innovative activity and sunk cost," International Journal of Industrial Organization, Elsevier, vol. 21(8), pages 1111-1133, October.
    8. Dario Sacco & Armin Schmutzler, 2008. "All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence," SOI - Working Papers 0806, Socioeconomic Institute - University of Zurich.
    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. Nicola Dimitri, 2012. "Service On the “Exclusion Principle” in all-pay auctions with incomplete information," Working Papers 2012/50, Maastricht School of Management.
    2. Olivier Bos & Martin Ranger, 2014. "All-Pay Auctions with Polynomial Rewards," Annals of Economics and Statistics, GENES, issue 115-116, pages 361-377.

    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. Olivier Bos & Martin Ranger, 2014. "All-Pay Auctions with Polynomial Rewards," Annals of Economics and Statistics, GENES, issue 115-116, pages 361-377.
    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. 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.
    4. Aner Sela, 2016. "Two Stage Contests With Effort-Dependent Rewards," Working Papers 1612, Ben-Gurion University of the Negev, Department of Economics.
    5. Subhashish Modak Chowdhury, 2009. "The all-pay auction with non-monotonic payoff," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-09, School of Economics, University of East Anglia, Norwich, UK..
    6. Aner Sela, 2012. "Sequential two-prize contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 383-395, October.
    7. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    8. Aner Sela, 2017. "Two-stage contests with effort-dependent values of winning," Review of Economic Design, Springer;Society for Economic Design, vol. 21(4), pages 253-272, December.
    9. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    10. Todd Kaplan & David Wettstein, 2015. "The optimal design of rewards in contests," Review of Economic Design, Springer;Society for Economic Design, vol. 19(4), pages 327-339, December.
    11. Reut Megidish & Aner Sela, 2013. "Allocation of Prizes in Contests with Participation Constraints," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 713-727, December.
    12. Kai Konrad & Wolfgang Leininger, 2007. "The generalized Stackelberg equilibrium of the all-pay auction with complete information," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 165-174, September.
    13. Stefan Jönsson & Armin Schmutzler, 2013. "All-pay auctions: Implementation and optimality," ECON - Working Papers 108, Department of Economics - University of Zurich.
    14. Kai A. Konrad, 2023. "The Geoeconomics of Trade Infrastructure and the Innovation Competition between China and the US," Working Papers tax-mpg-rps-2023-14, Max Planck Institute for Tax Law and Public Finance.
    15. Prokopovych, Pavlo & Yannelis, Nicholas C., 2023. "On monotone pure-strategy Bayesian-Nash equilibria of a generalized contest," Games and Economic Behavior, Elsevier, vol. 140(C), pages 348-362.
    16. Yizhaq Minchuk & Aner Sela, 2020. "Contests with insurance," Review of Economic Design, Springer;Society for Economic Design, vol. 24(1), pages 1-22, June.
    17. Aner Sela, 2018. "Reverse Contests," Working Papers 1804, Ben-Gurion University of the Negev, Department of Economics.
    18. Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2019. "A general framework for studying contests," MPRA Paper 97363, University Library of Munich, Germany.
    19. HHironori Otsubo, 2012. "Contests with Incumbency Advantages: An Experiment Investigation of the Effect of Limits on Spending Behavior and Outcome," Jena Economics Research Papers 2012-020, Friedrich-Schiller-University Jena.
    20. Michael Baye & Dan Kovenock & Casper Vries, 2012. "Contests with rank-order spillovers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 315-350, October.

    More about this item

    Keywords

    all-pay auctions; contests;

    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

    Statistics

    Access and download statistics

    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:cor:louvco:2009059. 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: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    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.