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A note on the Exclusion Principle

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  • Bertoletti, Paolo

Abstract

The Exclusion Principle [Baye, M.R., Kovenock, D., de Vries, C.G., 1993. Rigging the lobbying process: an application of the all-pay auction. American Economic Review 83, 289-294] asserts that, in an all-pay auction with fully informed participants, it might be profitable for the seller to exclude those bidders whose valuations are the largest. Menicucci [Menicucci, D., 2006. Banning bidders from all-pay auctions. Economic Theory 29, 89-94] shows that banning (ex ante symmetric) bidders can raise expected revenue also in a setting in which the seller regards valuations as identically and independently distributed. We prove that the latter occurrence cannot arise if valuations are distributed according to a monotonic hazard rate.

Suggested Citation

  • Bertoletti, Paolo, 2008. "A note on the Exclusion Principle," Journal of Mathematical Economics, Elsevier, vol. 44(11), pages 1215-1218, December.
  • Handle: RePEc:eee:mateco:v:44:y:2008:i:11:p:1215-1218
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    1. Mark Bagnoli & Ted Bergstrom, 2005. "Log-concave probability and its applications," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(2), pages 445-469, August.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-651, June.
    4. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, vol. 83(1), pages 289-294, March.
    5. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 291-305.
    6. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    7. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    8. Domenico Menicucci, 2006. "Banning Bidders from All-pay Auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 89-94, September.
    9. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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    Cited by:

    1. Matthias Dahm, 2017. "All-Pay Auctions with Extra Prize: A Partial Exclusion Principle," Discussion Papers 2017-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. Bertoletti, Paolo, 2006. "On the reserve price in all-pay auctions with complete information and lobbying games," MPRA Paper 1083, University Library of Munich, Germany.
    3. Bertoletti, Paolo, 2016. "Reserve prices in all-pay auctions with complete information," Research in Economics, Elsevier, vol. 70(3), pages 446-453.

    More about this item

    Keywords

    All-pay auctions Exclusion Principle Monotonic hazard rate Economic theory of lobbying;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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