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Abstract

Discontinuous games, such as auctions, may require special tie-breaking rules to guarantee equilibrium existence. The best results available ensure equilibrium existence only in mixed strategy with endogenously defined tie-breaking rules and communication of private information. We show that an all-pay auction tie-breaking rule is sufficient for the existence of pure strategy equilibrium in a class of auctions. The rule is explicitly defined and does not require communication of private information. We also characterize when special tie-breaking rules are really needed.

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Paper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/434.

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Handle: RePEc:ner:carlos:info:hdl:10016/434

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Find related papers by JEL classification:

• C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
• 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

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Cited by:

1. Araujo, Aloisio & de Castro, Luciano I., 2009. "Pure strategy equilibria of single and double auctions with interdependent values," Games and Economic Behavior, Elsevier, vol. 65(1), pages 25-48, January.
   
   • Aloisio Araujo & Luciano I. de Castro, 2006. "Pure Strategy Equilibria Of Single And Double Auctions With Interdependent Values," Economics Working Papers we065320, Universidad Carlos III, Departamento de Economía.
2. Luciano I. de Castro, 2008. "Equilibria Existence in Regular Discontinuous Games," Discussion Papers 1463, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
3. Luciano Castro, 2011. "Equilibrium existence and approximation of regular discontinuous games," Economic Theory, Springer, vol. 48(1), pages 67-85, September.

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