IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

The All-Pay Auction with Complete Information and Identity-Dependent Externalities

  • Bettina Klose

    (Department of Economics, University of Zurich)

  • Dan Kovenock

    (Economic Science Institute, Chapman University)

We derive a necessary and sufficient condition for the existence of equilibria with only two active players in the all-pay auction with complete information and identity-dependent externalities. This condition shows that the generic equilibrium of the standard all-pay auction is robust to the introduction of "small" identity-dependent externalities. In general, however, the presence of identity-dependent externalities invalidates well-established qualitative results concerning the set of equilibria of the first-price all-pay auction with complete information. With identity-dependent externalities equilibria are generally not payoff equivalent, and identical players may earn different payoffs in equilibrium. These observations show that Siegel’s (2009) results characterizing the set of equilibrium payoffs in all-pay contests, including the all-pay auction as a special case, do not extend to environments with identity-dependent externalities. We further compare the all-pay auction with identity-dependent externalities to the first-price winner-pay auction with identity-dependent externalities. We demonstrate that the equilibrium payoffs of the all-pay auction and winner-pay auction cannot be ranked unambiguously in the presence of identity-dependent externalities by providing examples of environments where equilibrium payoffs in the all-pay auction dominate those in the winner-pay auction and vice versa.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 13-10.

in new window

Length: 18 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:chu:wpaper:13-10
Contact details of provider: Postal: One University Drive, Orange, CA 92866
Phone: (714) 628-2830
Fax: (714) 628-2881
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Konrad, Kai A., 2005. "Silent Interests and All-Pay Auctions," Discussion Papers 2005/8, Free University Berlin, School of Business & Economics.
  2. Pastine, Ivan & Pastine, Tuvana, 2012. "Student incentives and preferential treatment in college admissions," Economics of Education Review, Elsevier, vol. 31(1), pages 123-130.
  3. Prokopovych, Pavlo & Yannelis, Nicholas C., 2014. "On the existence of mixed strategy Nash equilibria," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 87-97.
  4. Brian Roberson & Dmitriy Kvasov, 2012. "The non-constant-sum Colonel Blotto game," Economic Theory, Springer, vol. 51(2), pages 397-433, October.
  5. Kai A. Konrad & Dan Kovenock, 2011. "The Lifeboat Problem," Working Papers the_lifeboat_problem, Max Planck Institute for Tax Law and Public Finance.
  6. Christian Groh & Benny Moldovanu & Aner Sela & Uwe Sunde, 2012. "Optimal seedings in elimination tournaments," Economic Theory, Springer, vol. 49(1), pages 59-80, January.
  7. Jehiel, Phillipe & Moldovanu, Benny & Stacchetti, E., 1997. "Multidimensional Mechanism Design for Auctions with Externalities," Sonderforschungsbereich 504 Publications 97-04, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  8. Ron Siegel, 2010. "Asymmetric Contests with Conditional Investments," American Economic Review, American Economic Association, vol. 100(5), pages 2230-60, December.
  9. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
  10. Stuart Jordan & Adam Meirowitz, 2012. "Lobbying and discretion," Economic Theory, Springer, vol. 49(3), pages 683-702, April.
  11. Funk, Peter, 1996. "Auctions with Interdependent Valuations," International Journal of Game Theory, Springer, vol. 25(1), pages 51-64.
  12. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
  13. Hector Chade & Jorge Aseff, . "An Optimal Auction with Identity-Dependent Externalities," Working Papers 2133477, Department of Economics, W. P. Carey School of Business, Arizona State University.
  14. Matias Iaryczower & Andrea Mattozzi, 2012. "The pro-competitive effect of campaign limits in non-majoritarian elections," Economic Theory, Springer, vol. 49(3), pages 591-619, April.
  15. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
  16. Morath, Florian & Münster, Johannes, 2008. "Private versus complete information in auctions," Economics Letters, Elsevier, vol. 101(3), pages 214-216, December.
  17. Gilat Levy & Ronny Razin, 2012. "When do simple policies win?," Economic Theory, Springer, vol. 49(3), pages 621-637, April.
  18. Philippe Jehiel & Benny Moldovanu, 1995. "Cyclical Delay in Bargaining with Externalities," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 619-637.
  19. Ron Siegel, 2009. "All-Pay Contests," Econometrica, Econometric Society, vol. 77(1), pages 71-92, 01.
  20. Jehiel, Philippe & Moldovanu, Benny, 1995. "Negative Externalities May Cause Delay in Negotiation," Econometrica, Econometric Society, vol. 63(6), pages 1321-35, November.
  21. Philippe Jehiel & Benny Moldovanu, 1999. "Resale Markets and the Assignment of Property Rights," Review of Economic Studies, Oxford University Press, vol. 66(4), pages 971-991.
  22. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 1-7, February.
  23. Linster, Bruce G, 1993. " A Generalized Model of Rent-Seeking Behavior," Public Choice, Springer, vol. 77(2), pages 421-35, October.
  24. Pastine, Ivan & Pastine, Tuvana, 2012. "Incumbency advantage and political campaign spending limits," Journal of Public Economics, Elsevier, vol. 96(1), pages 20-32.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:chu:wpaper:13-10. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Megan Luetje)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.