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Caps In Sequential Contests

Author

Listed:
  • Aner Sela

    () (Department of Economics, Ben-Gurion University of the Negev, Israel)

  • Reut Megidish

    () (Ben-Gurion University of the Negev, Israel)

Abstract

We study a sequential two-stage all-pay auction with two identical prizes. In each stage, the players compete for one prize and each player may win either one or two prizes. The designer may impose a cap on the players' bids in each of the stages. We analyze the equilibrium in this sequential all-pay auction with bid caps and show that capping the players' bids is pro?table for a designer who wishes to maximize the players' expected total bid.

Suggested Citation

  • Aner Sela & Reut Megidish, 2010. "Caps In Sequential Contests," Working Papers 1007, Ben-Gurion University of the Negev, Department of Economics.
  • Handle: RePEc:bgu:wpaper:1007
    as

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    File URL: http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/1007.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-651, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Multi-stage contests; All-pay auctions; Bid caps;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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