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On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints

  • Li, Fei
  • Kotowski, Maciej Henryk
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We consider all-pay auctions in the presence of interdependent, affiliated valuations and private budget constraints. For the sealed-bid, all-pay auction we characterize a symmetric equilibrium in continuous strategies for the case of N bidders. Budget constraints encourage more aggressive bidding among participants with large endowments and intermediate valuations. We extend our results to the war of attrition where we show that budget constraints lead to a uniform amplification of equilibrium bids among bidders with sufficient endowments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two auction formats is generally not possible. Equilibria with discontinuous bidding strategies are discussed.

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File URL: http://dash.harvard.edu/bitstream/handle/1/11718166/Kotowski-OnTheContinuous.pdf
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Paper provided by Harvard Kennedy School of Government in its series Scholarly Articles with number 11718166.

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Date of creation: 2014
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Publication status: Published in Games and Economic Behavior
Handle: RePEc:hrv:hksfac:11718166
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