Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76234
Authors: 
Sacco, Dario
Schmutzler, Armin
Year of Publication: 
2008
Series/Report no.: 
Working Paper, Socioeconomic Institute, University of Zurich 0806
Abstract: 
The paper characterizes the mixed-strategy equilibria in all-pay auctions with endogenous prizes that depend positively on own effort and negatively on the effort of competitors. Such auctions arise naturally in the context of investment games, lobbying games, and promotion tournaments. We also provide an experimental analysis of a special case which captures the strategic situation of a two-stage game with investment preceding homogenous Bertrand competition. We obtain overinvestment both relative to the mixed-strategy equilibrium and the social optimum.
Subjects: 
all-pay auctions
oligopoly
investment
experiment
overbidding
JEL: 
C92
D44
L13
O31
Document Type: 
Working Paper

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