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All-pay auctions with resale

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  • Sui, Yong
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    Abstract

    We study equilibria of first- and second-price all-pay auctions with resale when players’ signals are affiliated and symmetrically distributed. We show that existence of resale possibilities introduces an endogenous element to players’ valuations and creates a signaling incentive for players. We characterize symmetric bidding equilibria for both firstand second-price all-pay auctions with resale and provide sufficient conditions for existence of symmetric equilibria. Under our conditions we show that second-price all-pay auctions generate no less expected revenue than first-price all-pay auctions with resale. The initial seller could benefit from publicly disclosing his private information which is affiliated with players’ signals.

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    File URL: http://mpra.ub.uni-muenchen.de/11463/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11463.

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    Date of creation: Oct 2006
    Date of revision: Oct 2007
    Handle: RePEc:pra:mprapa:11463

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    Keywords: all-pay auction; resale;

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    1. 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.
    2. Fudenberg, Drew & Tirole, Jean, 1986. "A Theory of Exit in Duopoly," Econometrica, Econometric Society, Econometric Society, vol. 54(4), pages 943-60, July.
    3. repec:rje:randje:v:37:y:2006:2:p:362-375 is not listed on IDEAS
    4. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, Econometric Society, vol. 50(5), pages 1089-1122, September.
    5. Giacomo Calzolari & Alessandro Pavan, 2005. "Monopoly with Resale," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1405, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Moldovanu, Benny & Sela, Aner, 1999. "The Optimal Allocation of Prizes in Contests," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 99-75, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    7. Haile,P.A., 1999. "Auctions with resale," Working papers, Wisconsin Madison - Social Systems 33, Wisconsin Madison - Social Systems.
    8. Vijay Krishna & John Morgan, 1994. "An Analysis of the War of Attrition and the All-Pay Auction," Game Theory and Information, EconWPA 9409002, EconWPA.
    9. Zheng, Charles Zhoucheng, 2002. "Optimal Auction with Resale," Staff General Research Papers, Iowa State University, Department of Economics 12664, Iowa State University, Department of Economics.
    10. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, American Economic Association, vol. 72(3), pages 514-26, June.
    11. Jacob K. Goeree, 2000. "Bidding for the Future," Virginia Economics Online Papers 346, University of Virginia, Department of Economics.
    12. Lawrence M. Ausubel & Peter Cramton, 1998. "The Optimality of Being Efficient," Papers of Peter Cramton 98wpoe, University of Maryland, Department of Economics - Peter Cramton, revised 18 Jun 1999.
    13. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 72-110, January.
    14. Gale, Ian L & Hausch, Donald B & Stegeman, Mark, 2000. "Sequential Procurement with Subcontracting," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 989-1020, November.
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