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Asymmetric All-Pay Auctions with Spillovers

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  • Maria Betto
  • Matthew W. Thomas

Abstract

When opposing parties compete for a prize, the sunk effort players exert during the conflict can affect the value of the winner's reward. These spillovers can have substantial influence on the equilibrium behavior of participants in applications such as lobbying, warfare, labor tournaments, marketing, and R&D races. To understand this influence, we study a general class of asymmetric, two-player all-pay auctions where we allow for spillovers in each player's reward. The link between participants' efforts and rewards yields novel effects -- in particular, players with higher costs and lower values than their opponent sometimes extract larger payoffs.

Suggested Citation

  • Maria Betto & Matthew W. Thomas, 2021. "Asymmetric All-Pay Auctions with Spillovers," Papers 2106.08496, arXiv.org, revised Feb 2023.
    • Handle: RePEc:arx:papers:2106.08496
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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