The all-pay auction with non-monotonic payoff
AbstractWe analyze an endogenous prize all-pay auction under complete information where it is possible that none of the bidders wins and the winning payoff becomes non-monotonic in own bid. We derive the conditions for the existence of pure strategy equilibria and fully characterize the unique mixed strategy equilibrium when pure strategy equilibria do not exist. The high-valuation bidder places two distinct mass points in his equilibrium mixed strategy and the equilibrium support of the low-valuation bidder is not continuous. Under common valuation, in the equilibrium mixed strategy both bidders place mass points at the same point of the support. Possible applications are discussed.
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Bibliographic InfoPaper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 09-09.
Date of creation: 01 Dec 2009
Date of revision:
Postal: Helen Chapman, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK
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
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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