The all-pay auction with complete information

Baye, Michael R.; Kovenock, Dan; Vries, Casper G. de

doi:10.1007/s001990050092

Cited by 318 publications

(372 citation statements)

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“…The environments we considered are similar to an all-pay-auction (a thorough analysis can be found in Baye, Kovenock and Vries [1996]); the di®erence being that our time-dependent reward would be the equivalent of a bid-dependent value (rather than a commonly assumed constant value). Comparing our symmetric case to the symmetric all-pay auction, the choice of t min corresponds to bidding one's valuation in the all-pay auction.…”

Section: Relationship To All-pay Auctionsmentioning

confidence: 99%

“…For all-pay auctions with asymmetric rewards, Baye, Kovenock, and Vries [1996]¯nd that the weak bidder (the one with the low value) has zero expected pro¯ts, while the strong bidder (the one with the high value) earns the di®erence between the rewards. They also¯nd that the equilibrium has mixed strategies on a support between zero and the lower valuation with the weak bidder placing an atom at zero.…”

Section: Relationship To All-pay Auctionsmentioning

confidence: 99%

“…Due to Dasgupta's work, the literature on all-pay auctions now cites patent races as a primary economic application (Amann & Leininger [1996] and Baye, Kovenock & Vries [1996]). However, studying patent races as such ignores any e®ect that the cost incurred may have on the reward gained.…”

Section: Introductionmentioning

confidence: 99%

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Innovative activity and sunk cost

Kaplan

Luski

Wettstein

2003

International Journal of Industrial Organization

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We analyze innovative activity in a general framework with time-dependent rewards and sunk costs. When¯rms are identical, innovation is delayed by an increase in the number of¯rms or a decrease in the size of the reward. When one¯rm has higher pro¯t potential, it is more likely to innovate¯rst. Our framework generalizes an all-pay auction; however, we show that under certain conditions there is qualitatively di®erent equilibrium behavior.

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Section: Relationship To All-pay Auctionsmentioning

confidence: 99%

Section: Relationship To All-pay Auctionsmentioning

confidence: 99%

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Innovative activity and sunk cost

Kaplan

Luski

Wettstein

2003

International Journal of Industrial Organization

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“…See for example, Baye, Kovenock and de Vries [4,5] and the citations, therein. Complete information creates a mixed strategy equilibrium and is a very different exercise from modeling a contest with private information.…”

Section: Discussionmentioning

confidence: 99%

“…The contest designer's objective is to maximize expected revenue subject to participation and incentive constraints. 5 We consider the case where the designer has control over a, b, q 0 , and G(θ).…”

Section: A Contestant Behavior Under These More General Contest Rulesmentioning

confidence: 99%

Contests where there is variation in the marginal productivity of effort

Singh

Wittman

2001

Econ Theory

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We provide a characterization of participants' behavior in a contest or tournament where the marginal productivity of effort varies across contestants and individual productivity is private information. We then consider the optimal design of such a contest.We first analyze contestant behavior for the usual type of contest, where the highest output wins. Abilities need not be independently distributed. We demonstrate that there is a unique symmetric equilibrium output function, that output is increasing in ability, and that marginal effort is increasing in ability, while effort decreases when the cost of effort increases.Next we consider the case where the highest output need not win, with independently distributed abilities. We analyze the contest designer's decisions in choosing contest rules optimal from her perspective. We show that the output produced, probability of winning, and contest designer's expected revenue are generally increasing in contestants' ability. We examine the relationship between the marginal cost of producing output and marginal utility per dollar of the net award for winning.We acknowledge the helpful comments of seminar audiences at UC Santa Cruz and the Econometric Society Winter Meeting, and the financial support of the UCSC Academic Senate and the Division of Social Sciences. We would like to thank William Brock for helpful suggestions, and an anonymous referee for detailed comments that helped us improve the paper substantially.

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Investing Even in Uneven Contests: Effects of Asymmetry on Investment in Contests

Hart

Avrahami

Kareev

et al. 2015

Behavioral Decision Making

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Many competitions, such as political campaigns, innovative endeavors, sports, or courting rituals, require investment of nonrefundable resources: One contestant wins the prize for the invested amount, whereas all others lose their investments without receiving compensation. Frequently, contests are asymmetric, because of differing resources or prize valuations. Does asymmetry discourage the weaker contestants from investing? Do stronger contestants take this into account and also invest less? Or does the desire to win abolish these differences? Two experiments explored the effects of asymmetry between the contestants-arising from their resources or prizes-on nonrefundable investments. Subjects repeatedly competed in both symmetric and asymmetric contests, enabling within-subject comparisons. We observed an effect of asymmetry only when it concerned resources: Subjects overall invested less when their resources were unequal, whereas inequality in the prizes did not influence investments. This pattern suggests that winning itself is motivating. The changes between consecutive investments can be explained by reactions to the previous outcome (win or loss): Across all contests, investment decreased following a win and increased following a loss.

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The all-pay auction with complete information

Cited by 318 publications

References 0 publications

Innovative activity and sunk cost

Innovative activity and sunk cost

Contests where there is variation in the marginal productivity of effort

Investing Even in Uneven Contests: Effects of Asymmetry on Investment in Contests

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