Preferential Treatment may Hurt: Another Application of the All-Pay Auction
AbstractIn many contests a subset of contestants is granted preferential treatment which is presumably intended to be advantageous. Examples include affirmative action and biased procurement policies. In this paper, however, I show that some of the supposed beneficiaries may in fact become worse off when the favored group is diverse. The reason is that the other favored contestants become more aggressive, which may outweigh the advantage that is gained over contestants who do not receive preferential treatment. Likewise, a contestant may be made better off when a subset of his competitors is granted preferential treatment. The contest is modelled as an incomplete-information all-pay auction in which contestants have heterogenous and non-linear cost functions. Incomplete information is crucial for the results.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 1005.
Length: 30 pages
Date of creation: 2010
Date of revision:
Affirmative Action; All-Pay Auctions; Contests; Preferential Treatment.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pastine, Ivan & Pastine, Tuvana, 2012. "Incumbency advantage and political campaign spending limits," Journal of Public Economics, Elsevier, vol. 96(1), pages 20-32.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephen Kosempel).
If references are entirely missing, you can add them using this form.