All-Pay Auctions with Polynomial Rewards
This paper examines a perfectly discriminating contest (all-pay auction) with two asymmetric players. We focus on unordered valuations. Valuations are endogenous (polynomial functions) and depend on the effort each player invests in the contest. The shape of the valuation function is common knowledge and differs between the contestants. Some key properties of R&D races, lobbying activity and sport contests are captured by this framework. After analyzing the unique mixed strategy equilibrium, we derive a closed form of the expected expenditure of both players. We characterize the expected expenditure by means of incomplete Beta functions.
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"The All-Pay Auction With Complete Information,"
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- Yeon-Koo Che & Ian Gale, 2006.
"Caps on Political Lobbying: Reply,"
0506-15, Columbia University, Department of Economics.
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"Politically Contestable Rents And Transfers,"
Economics and Politics,
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- Dario Sacco & Armin Schmutzler, 2008. "All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence," SOI - Working Papers 0806, Socioeconomic Institute - University of Zurich.
- Ron Siegel, 2010. "Asymmetric Contests with Conditional Investments," American Economic Review, American Economic Association, vol. 100(5), pages 2230-60, December.
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Working Paper Series in Economics
46, University of Cologne, Department of Economics.
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