On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints, Second Version
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. 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 endowments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two auction formats is generally not possible. Equilibria with discontinuous bidding strategies are discussed.
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Bibliographic InfoPaper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 13-043.
Length: 59 pages
Date of creation: 23 Apr 2012
Date of revision: 05 Aug 2013
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
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.:
- Che, Yeon-Koo & Gale, Ian, 2006.
"Revenue Comparisons for Auctions When Bidders Have Arbitrary Types,"
6102, University Library of Munich, Germany.
- Che, Yeon-Koo & Gale, Ian, 2006. "Revenue comparisons for auctions when bidders have arbitrary types," Theoretical Economics, Econometric Society, vol. 1(1), pages 95-118, March.
- Yeon-Koo Che & Ian Gale, 2005. "Revenue comparisons for auctions when bidders have arbitrary types," Discussion Papers 0506-03, Columbia University, Department of Economics.
- Yeon-Koo Che & Ian Gale, 2005. "Revenue Comparisons for Auctions when Bidders Have Arbitrary Types," NajEcon Working Paper Reviews 784828000000000012, www.najecon.org.
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