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The All-pay Auction with Complete Information

Author

Listed:
  • Michael R. Baye
  • Dan Kovenock
  • Casper De Vries

Abstract

In a (first price) all-pay auction, bidders simultaneously submit bids for an item. All players forfeit their bids, and the high bidder receives the item. This auction is widelly used in economics to model rent seeking, R&D races. political contests, and jo b promotion tournaments . We fully characterize equilibrium for this class of games, and show that the set of equilibria is much larger than has been recognized in the literature. When there are more than two players. for instance. we show that even when the auction is symmetric there exists a continuum of asymmetric equilibria. Moreover. for economically important configurations of valuations. there is not revenue equivalence across the equilibria; asymmetric equilibria imply higher expected revenues than the symmetric Equilibrium.

Suggested Citation

  • Michael R. Baye & Dan Kovenock & Casper De Vries, 1995. "The All-pay Auction with Complete Information," CESifo Working Paper Series 90, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_90
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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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