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Monotone equilibrium of two-bidder all-pay auctions Redux

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  • Lu, Jingfeng
  • Parreiras, Sérgio O.

Abstract

In this paper, we revisit the two-bidder asymmetric all-pay auction of Amann and Leininger (1996) by allowing interdependent values and correlated signals. Both values and signals are distributed on continuous supports. We provide conditions for the existence and uniqueness of a monotone pure-strategy equilibrium (MPSE), and constructively characterize the MPSE when it exists. We find that given the marginal distributions of the signals, the equilibrium allocation is solely determined by how bidders' values depend on their signals. In particular, the equilibrium allocation does not depend on how bidders' signals are correlated.

Suggested Citation

  • Lu, Jingfeng & Parreiras, Sérgio O., 2017. "Monotone equilibrium of two-bidder all-pay auctions Redux," Games and Economic Behavior, Elsevier, vol. 104(C), pages 78-91.
    • Handle: RePEc:eee:gamebe:v:104:y:2017:i:c:p:78-91
    DOI: 10.1016/j.geb.2017.03.005
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    Cited by:

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    4. Jingfeng Lu & Hongkun Ma & Zhe Wang, 2018. "Ranking Disclosure Policies In All‐Pay Auctions," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1464-1485, July.
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    More about this item

    Keywords

    All-pay auctions; Asymmetries; Contests; Correlated signals; Interdependent valuations;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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