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Caps in asymmetric all-pay auctions with incomplete information

Author

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  • Nicolas Sahuguet

    (HEC Montréal)

Abstract

We study asymmetric all-pay auctions where two privately informed agents bid for a prize. We show that capping the bids is profitable for a designer who wants to maximize the sum of bids (revenue). This finding confims the results of Che and Gale (1998) in the context of incomplete information and completes the analysis of Gavious, Moldovanu and Sela (2002) by analyzing the case of ex-ante asymmetric players.

Suggested Citation

  • Nicolas Sahuguet, 2006. "Caps in asymmetric all-pay auctions with incomplete information," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-06c70004
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    References listed on IDEAS

    as
    1. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    2. Fang, Hanming & Parreiras, Sergio O., 2002. "Equilibrium of Affiliated Value Second Price Auctions with Financially Constrained Bidders: The Two-Bidder Case," Games and Economic Behavior, Elsevier, vol. 39(2), pages 215-236, May.
    3. Archishman Chakraborty, 2002. "Optimal Price Ceilings in a Common Value Auction," Economics Bulletin, AccessEcon, vol. 3(7), pages 1-7.
    4. PARREIRAS, Sérgio O. & RUBINCHIK-PESSACH, Anna, 2006. "Contests with heterogeneous agents," LIDAM Discussion Papers CORE 2006004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Citations

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    Cited by:

    1. Szech, Nora, 2015. "Tie-breaks and bid-caps in all-pay auctions," Games and Economic Behavior, Elsevier, vol. 92(C), pages 138-149.
    2. Reut Megidish & Aner Sela, 2014. "Caps In Sequential Contests," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 608-617, April.
    3. Kiho Yoon, 2012. "On asymmetry in all-pay auctions," Discussion Paper Series 1208, Institute of Economic Research, Korea University.
    4. René Kirkegaard, 2007. "Comparative Statics and Welfare in Heterogeneous Contests: Bribes, Caps, and Performance Thresholds," Working Papers 0702, Brock University, Department of Economics.
    5. Kline, Brendan, 2009. "A restriction on lobbyist donations," Economics Letters, Elsevier, vol. 104(3), pages 129-132, September.
    6. Bo Chen & Marco Serena, 2020. "Bid Caps and Disclosure Policies," Working Papers tax-mpg-rps-2020-08, Max Planck Institute for Tax Law and Public Finance.
    7. Zhonghao Shui, 2023. "Rejection prices and an auctioneer with non-monotonic utility," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 925-951, September.
    8. Kirkegaard, René, 2012. "Favoritism in asymmetric contests: Head starts and handicaps," Games and Economic Behavior, Elsevier, vol. 76(1), pages 226-248.
    9. Ivan Pastine & Tuvana Pastine, 2023. "Equilibrium existence and expected payoffs in all-pay auctions with constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(4), pages 983-1007, May.
    10. Blackstone, Erwin A. & Buck, Andrew J. & Hakim, Simon, 2004. "Privatizing adoption and foster care: Applying auction and market solutions," Children and Youth Services Review, Elsevier, vol. 26(11), pages 1033-1049, November.
    11. Kirkegaard Rene, 2008. "Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-32, September.
    12. Rene Kirkegaard, 2008. "Favoritism in Contests: Head Starts and Handicaps," Working Papers 0805, Brock University, Department of Economics, revised Nov 2008.
    13. Lagziel, David, 2019. "Credit auctions and bid caps," Games and Economic Behavior, Elsevier, vol. 113(C), pages 416-422.
    14. Ivan Pastine & Tuvana Pastine, 2012. "All-pay contests with constraints," Working Papers 201204, School of Economics, University College Dublin.

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    More about this item

    Keywords

    All-pay auctions;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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