Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22824 
Year of Publication: 
2002
Series/Report no.: 
Bonn Econ Discussion Papers No. 14/2002
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
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
contest
asymmetric allocation rule
rent-seeking
asymmetric information
JEL: 
D44
Document Type: 
Working Paper

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