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Title:When Bidding More is Not Enough: All-Pay Auctions with Handicaps PDF Logo
Authors:Feess, Eberhard
Muehlheusser, Gerd
Walzl, Markus
Issue Date:2002
Series/Report no.:Bonn econ discussion papers 2002,14
Abstract:We consider a standard two-player all-pay auction with private values, where the valuation for the object is private information to each bidder. The crucial feature is that one bidder is favored by the allocation rule in the sense that he need not bid as much as the other bidder to win the auction. Analogously, the other bidder is handicapped by the rule as overbidding the rival may not be enough to win the auction. Clearly, this has important implications on equilibrium behavior. We fully characterize the equilibrium strategies for this auction format and show that there exists a unique pure strategy Bayesian Nash Equilibrium.
Subjects:All-pay auction
asymmetric allocation rule
asymmetric information
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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