Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26443
Authors: 
Bos, Olivier
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2398
Abstract: 
Recent literature has shown that all-pay auctions raise more money for charity than winner-pay auctions. We demonstrate that the first and second-price winner-pay auctions generate higher revenue than first-price all-pay auctions when bidders are sufficiently asymmetric. To prove it, we consider a framework with complete information. This analysis is relevant for two main reasons. On the one hand, complete information is more realistic and corresponds to events which occur for instance in a local service club (like in a voluntary organization) or in a show business dinner. Potential bidders are acquaintances or know one another well. On the other hand, our model keeps the qualitative predictions of a private value model under incomplete information in which bidders are ex ante asymmetric, which means that bidders' values are drawn from different distributions. Furthermore, we also analyze second-price all-pay auction. Finally, we show that individual minimum bids could improve the relative revenue performance of first-price all-pay compared to first-price winner-pay auction.
Subjects: 
All-pay auctions
charity
complete information
externalities
JEL: 
D44
D62
D64
Document Type: 
Working Paper

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