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Pure strategy equilibria of multidimensional and non-monotonic auctions

  • Moreira, Humberto Ataíde
  • Araújo, Aloísio Pessoa de
  • Castro Filho, Luciano I. de

We give necessary and sufficient conditions for the existence of symmetric equilibrium without ties in interdependent values auctions, with multidimensional independent types and no monotonic assumptions. In this case, non-monotonic equilibria might happen. When the necessary and sufficient conditions are not satisfied, there are ties with positive probability. In such case, we are still able to prove the existence of pure strategy equilibrium with an all-pay auction tie-breaking rule. As a direct implication of these results, we obtain a generalization of the Revenue Equivalence Theorem. From the robustness of equilibrium existence for all-pay auctions in multidimensional setting, an interpretation of our results can give a new justification to the use of tournaments in practice.

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Paper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 571.

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Date of creation: 01 Nov 2004
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Handle: RePEc:fgv:epgewp:571
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