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Elastic contests and the robustness of the all-pay auctions

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  • Christian Ewerhart

Abstract

This paper studies a large class of imperfectly discriminating contests, referred to as elastic contests, that induce players to either overbid a standing bid or to abstain from bidding altogether. Many common forms of contest are elastic. In any equilibrium of an elastic contest, there is complete rent dissipation for all but at most one player. This result is used to show that in any suffciently decisive anonymous standard contest, any equilibrium is an all-pay auction equilibrium. Thus, the analysis offers strong support for the robustness of the all-pay auction. The approach also delivers definite answers regarding the extent of rent dissipation in Tullock contests with intermediate values of the decisiveness parameter.

Suggested Citation

  • Christian Ewerhart, 2014. "Elastic contests and the robustness of the all-pay auctions," ECON - Working Papers 155, Department of Economics - University of Zurich.
    • Handle: RePEc:zur:econwp:155
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    File URL: https://www.zora.uzh.ch/id/eprint/95777/1/econwp155.pdf
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    References listed on IDEAS

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    Cited by:

    1. Christian Ewerhart, 2015. "Mixed equilibria in Tullock contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(1), pages 59-71, September.
    2. Ewerhart, Christian, 2017. "Contests with small noise and the robustness of the all-pay auction," Games and Economic Behavior, Elsevier, vol. 105(C), pages 195-211.
    3. Christian Ewerhart & Guang-Zhen Sun, 2018. "Equilibrium in the symmetric Hirshleifer contest: uniqueness and characterization," ECON - Working Papers 286, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    Contests; all-pay auction; rent-seeking; mixed nash equilibrium; rent dissipation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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