On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints
AbstractWe consider all-pay auctions in the presence of interdependent, affiliated valuations and private budget constraints. For the sealed-bid, all-pay auction we characterize a symmetric equilibrium in continuous strategies for the case of N bidders and we investigate its properties. Budget constraints encourage more aggressive bidding among participants with large endowments and intermediate valuations. We extend our results to the war of attrition where we show that budget constraints lead to a uniform amplification of equilibrium bids among bidders with sufficient endownments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two mechanisms is generally not possible.
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 Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 12-019.
Length: 44 pages
Date of creation: 23 Apr 2012
Date of revision:
All-Pay Auction; War of Attrition; Budget Constraints; Common Values; Private Values; Affiliation; Contests;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-22 (All new papers)
- NEP-CTA-2012-05-22 (Contract Theory & Applications)
- NEP-MIC-2012-05-22 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fang, Hanming & Parreiras, Sergio O., 2003. "On the failure of the linkage principle with financially constrained bidders," Journal of Economic Theory, Elsevier, vol. 110(2), pages 374-392, June.
- Lebrun, Bernard, 1999. "First Price Auctions in the Asymmetric N Bidder Case," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 125-42, February.
- Vijay Krishna & John Morgan, 1994.
"An Analysis of the War of Attrition and the All-Pay Auction,"
Game Theory and Information, EconWPA
- Krishna, Vijay & Morgan, John, 1997. "An Analysis of the War of Attrition and the All-Pay Auction," Journal of Economic Theory, Elsevier, vol. 72(2), pages 343-362, February.
- Yeon-Koo Che & Ian Gale, 2005.
"Revenue comparisons for auctions when bidders have arbitrary types,"
Discussion Papers, Columbia University, Department of Economics
0506-03, Columbia University, Department of Economics.
- Che, Yeon-Koo & Gale, Ian, 2006. "Revenue comparisons for auctions when bidders have arbitrary types," Theoretical Economics, Econometric Society, Econometric Society, vol. 1(1), pages 95-118, March.
- Yeon-Koo Che & Ian Gale, 2005. "Revenue Comparisons for Auctions when Bidders Have Arbitrary Types," NajEcon Working Paper Reviews 784828000000000012, www.najecon.org.
- Che, Yeon-Koo & Gale, Ian, 2006. "Revenue Comparisons for Auctions When Bidders Have Arbitrary Types," MPRA Paper 6102, University Library of Munich, Germany.
- Leininger, Wolfgang, 1991. "Patent competition, rent dissipation, and the persistence of monopoly: The role of research budgets," Journal of Economic Theory, Elsevier, vol. 53(1), pages 146-172, February.
- Maskin, Eric & Riley, John, 2003.
"Uniqueness of equilibrium in sealed high-bid auctions,"
Games and Economic Behavior,
Elsevier, vol. 45(2), pages 395-409, November.
- Eric Maskin & John Riley, 2003. "Uniqueness of Equilibrium in Sealed High-Bid Auctions," Economics Working Papers 0031, Institute for Advanced Study, School of Social Science.
- Che, Yeon-Koo & Gale, Ian, 1998. "Standard Auctions with Financially Constrained Bidders," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(1), pages 1-21, January.
- Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993.
"Rigging the Lobbying Process: An Application of the All-Pay Auction,"
American Economic Review,
American Economic Association, vol. 83(1), pages 289-94, March.
- Baye, M.R. & Kovenock, D. & De Vries, C.G., 1991. "Rigging The Lobbying Process: An Application Of The All- Pay Auction," Purdue University Economics Working Papers 1002, Purdue University, Department of Economics.
- Baye, M.R. & Kovenock, D. & De Vries, C.G., 1992. "Rigging the Lobbying Process: An Application of the All- Pay Auction," Papers, Pennsylvania State - Department of Economics 9-92-2, Pennsylvania State - Department of Economics.
- Patrick Bajari & Ali Hortacsu, 2003.
"Are Structural Estimates of Auction Models Reasonable? Evidence from Experimental Data,"
Working Papers, Stanford University, Department of Economics
03002, Stanford University, Department of Economics.
- Patrick Bajari & Ali Hortacsu, 2005. "Are Structural Estimates of Auction Models Reasonable? Evidence from Experimental Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 113(4), pages 703-741, August.
- Patrick Bajari & Ali Hortacsu, 2003. "Are Structural Estimates of Auction Models Reasonable? Evidence from Experimental Data," NBER Working Papers 9889, National Bureau of Economic Research, Inc.
- Athey, Susan & Haile, Philip A., 2007. "Nonparametric Approaches to Auctions," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 60 Elsevier.
- Luciano I. de Castro, 2007. "Affiliation, equilibrium existence and the revenue ranking of auctions," Economics Working Papers we074622, Universidad Carlos III, Departamento de EconomÃa.
- Li, Fei & Kotowski, Maciej Henryk, 2014. "On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints," Scholarly Articles 11718166, Harvard Kennedy School of Government.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dolly Guarini).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.