On the reserve price in all-pay auctions with complete information and lobbying games
AbstractWe show that the seller’s optimal reserve price in an all-pay auction with complete information is higher than in a standard auction. We use our results to re-consider some findings of the literature that models lobbying games as all-pay auctions. In particular, we show that the so-called Exclusion Principle appears to rely crucially on the implicit assumption of a “weak” (in terms of bargaining power) seller, and does not hold if she regards bidders’ valuations as iid according to a monotonic hazard rate. Our preliminary results for the case of independent but asymmetric bidders make it even more suspicious.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 1083.
Date of creation: Jan 2006
Date of revision:
all-pay auctions; reserve price; economic theory of lobbying;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-CDM-2007-01-14 (Collective Decision-Making)
- NEP-GTH-2007-01-14 (Game Theory)
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