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All-Pay Auctions with Reserve Price and Bid Cap

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  • Oleg Muratov

Abstract

I study the joint effects of the reserve price and the bid cap in the all-pay auction. I show that in equilibrium bidding, there are: (i) atoms at 0, the reserve price, and the bid cap; and (ii) continuous bidding above the reserve. If the valuations are high enough, the range for continuous bidding vanishes entirely. Further, I characterize environments with multiple equilibria and derive settings with the following features: with two players, the player with the lower valuation can have a positive rent; with three players, active competition for a single prize is possible with totally asymmetric valuations; in both cases, the value of the positive payoff for the winner can vary across different equilibria.

Suggested Citation

  • Oleg Muratov, 2021. "All-Pay Auctions with Reserve Price and Bid Cap," Diskussionsschriften dp2106, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp2106
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    References listed on IDEAS

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