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The best-shot all-pay (group) auction with complete information

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  • Stefano Barbieri

    ()

  • David Malueg

    ()

  • Iryna Topolyan

    ()

Abstract

We analyze an all-pay group contest in which individual members’ efforts are aggregated via the best-shot technology and the prize is a public good for the winning group. The interplay of within-group free-riding and across-group competition allows for a wide variety of equilibria, according to how well groups overcome internal free-riding. In contrast with the existing literature, we derive equilibria of a symmetric model in which multiple agents per group are active. Our findings differ qualitatively from those of the individualistic all-pay auction: rents are not necessarily dissipated in equilibrium, total expected efforts vary across equilibria, and participation is expected to be greater. Moreover, equilibria with greater symmetry of behavior within a group are shown to have more “wasted” effort but also greater payoffs as overall efforts are lower. In contrast to standard economic intuition, free-riding can be beneficial for players as it reduces competition among groups. Examples of asymmetric group contests are also studied. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Stefano Barbieri & David Malueg & Iryna Topolyan, 2014. "The best-shot all-pay (group) auction with complete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 603-640, November.
  • Handle: RePEc:spr:joecth:v:57:y:2014:i:3:p:603-640
    DOI: 10.1007/s00199-014-0847-6
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cardona, Daniel & Rubí-Barceló, Antoni, 2016. "Group-contests with endogenous claims," European Journal of Political Economy, Elsevier, vol. 44(C), pages 97-111.
    2. Subhasish M. Chowdhury & Iryna Topolyan, 2016. "Best-shot versus weakest-link in political lobbying: an application of group all-pay auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(4), pages 959-971, December.
    3. Eliaz, Kfir & Wu, Qinggong, 2018. "A simple model of competition between teams," Journal of Economic Theory, Elsevier, vol. 176(C), pages 372-392.
    4. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    5. Subhasish M. Chowdhury & Iryna Topolyan, 2015. "The Group All-Pay Auction with Heterogeneous Impact Functions," University of East Anglia Applied and Financial Economics Working Paper Series 069, School of Economics, University of East Anglia, Norwich, UK..
    6. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo Group Munich.
    7. Barbieri, Stefano & Malueg, David A., 2016. "Private-information group contests: Best-shot competition," Games and Economic Behavior, Elsevier, vol. 98(C), pages 219-234.
    8. Barbieri, Stefano & Konrad, Kai A. & Malueg, David A., 2019. "Preemption Contests Between Groups," CEPR Discussion Papers 13738, C.E.P.R. Discussion Papers.
    9. Spencer Bastani & Thomas Giebe & Oliver Gürtler, 2019. "A General Framework for Studying Contests," CESifo Working Paper Series 7993, CESifo Group Munich.

    More about this item

    Keywords

    All-pay auction; Group contest; Free-riding; Volunteer’s dilemma; Group-size paradox; Private provision of public goods; C72; D62; D72; H41;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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