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All-pay auctions with private signals about opponents’ values

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  • Zhuoqiong Chen

    (Harbin Institute of Technology, Shenzhen)

Abstract

We study all-pay auctions where each player observes her private value as well as a noisy private signal about the opponent’s value, following Fang and Morris’s (J Econ Theory 126(1):1–30, 2006) analysis of winner-pay auctions with multidimensional private signals. A unique symmetric monotonic equilibrium exists if the signal is not informative enough. When the signal is sufficiently informative, there exists a symmetric non-monotonic equilibrium in which all types of players randomize in overlapping supports. The revenue is lower than that in the standard independent private value setting. Fixing the signal’s informativeness, the all-pay auction raises lower revenue than the second-price auction, whereas the revenue ranking between the all-pay and the first-price auction is ambiguous.

Suggested Citation

  • Zhuoqiong Chen, 2021. "All-pay auctions with private signals about opponents’ values," Review of Economic Design, Springer;Society for Economic Design, vol. 25(1), pages 33-64, June.
  • Handle: RePEc:spr:reecde:v:25:y:2021:i:1:d:10.1007_s10058-020-00242-3
    DOI: 10.1007/s10058-020-00242-3
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    More about this item

    Keywords

    All-pay auction; First-price auction; Second-price auction; Revenue ranking; Multidimensional signals; Private signals;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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