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Large all-pay auctions with IPV bidders

Author

Listed:
  • Murto, Pauli
  • Välimäki, Juuso

Abstract

This note analyzes different types of all-pay auctions when the number of bidders becomes large. We compute the distributions of the highest bids for the first-price all pay auction and we show that the expected payment made by the winning bidder converges to half of the total payments. In the second-price all-pay auction (the war of attrition), the highest bid amounts to about 35.5% of the total revenues. We also compute the payments for all-pay auctions with multiple prizes.

Suggested Citation

  • Murto, Pauli & Välimäki, Juuso, 2017. "Large all-pay auctions with IPV bidders," Journal of Economic Theory, Elsevier, vol. 169(C), pages 629-640.
  • Handle: RePEc:eee:jetheo:v:169:y:2017:i:c:p:629-640
    DOI: 10.1016/j.jet.2017.03.008
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    References listed on IDEAS

    as
    1. Bali, Valentina & Jackson, Matthew, 2002. "Asymptotic Revenue Equivalence in Auctions," Journal of Economic Theory, Elsevier, vol. 106(1), pages 161-176, September.
    2. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    3. Wojciech Olszewski & Ron Siegel, 2016. "Large Contests," Econometrica, Econometric Society, vol. 84, pages 835-854, March.
    4. Paul Klemperer & Jeremy Bulow, 1999. "The Generalized War of Attrition," American Economic Review, American Economic Association, vol. 89(1), pages 175-189, March.
    5. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    6. Wolfgang Pesendorfer & Jeroen M. Swinkels, 1997. "The Loser's Curse and Information Aggregation in Common Value Auctions," Econometrica, Econometric Society, vol. 65(6), pages 1247-1282, November.
    7. Krishna, Vijay & Morgan, John, 1997. "An Analysis of the War of Attrition and the All-Pay Auction," Journal of Economic Theory, Elsevier, vol. 72(2), pages 343-362, February.
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    More about this item

    Keywords

    All-pay auction; Large auctions;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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