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All-pay auction equilibria in contests

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  • Alcalde, José
  • Dahm, Matthias

Abstract

We analyze (non-deterministic) contests with anonymous contest success functions. There is no restriction on the number of contestants or on their valuations for the prize. We provide intuitive and easily verifiable conditions for the existence of an equilibrium with properties similar to the one of the (deterministic) all-pay auction. Since these conditions are fulfilled for a wide array of situations, the predictions of this equilibrium are very robust to the specific details of the contest. An application of this result contributes to fill a gap in the analysis of the popular Tullock rent- seeking game because it characterizes properties of an equilibrium for increasing returns to scale larger than two, for any number of contestants and in contests with or without a common value. Keywords: (non-) deterministic contest, all-pay auction, contest success functions. JEL Classification Numbers: C72 (Noncooperative Games), D72 (Economic Models of Political Processes: Rent-Seeking, Elections), D44 (Auctions).

Suggested Citation

  • Alcalde, José & Dahm, Matthias, 2008. "All-pay auction equilibria in contests," Working Papers 2072/5368, Universitat Rovira i Virgili, Department of Economics.
    • Handle: RePEc:urv:wpaper:2072/5368
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    1. José Alcalde & Matthias Dahm, 2007. "Tullock and Hirshleifer: a meeting of the minds," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 101-124, September.
    2. Che, Yeon-Koo & Gale, Ian, 2000. "Difference-Form Contests and the Robustness of All-Pay Auctions," Games and Economic Behavior, Elsevier, vol. 30(1), pages 22-43, January.
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    Cited by:

    1. Konrad, Kai A. & Kovenock, Dan, 2009. "The alliance formation puzzle and capacity constraints," Economics Letters, Elsevier, vol. 103(2), pages 84-86, May.
    2. José Alcalde & Matthias Dahm, 2007. "Tullock and Hirshleifer: a meeting of the minds," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 101-124, September.
    3. Mustafa Yildirim, 2015. "Accuracy in contests: players’ perspective," Review of Economic Design, Springer;Society for Economic Design, vol. 19(1), pages 67-90, March.
    4. J. Atsu Amegashie, 2012. "A Nested Contest: Tullock Meets the All-Pay Auction," Working Papers 1211, University of Guelph, Department of Economics and Finance.
    5. 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.
    6. Wang Zhewei, 2010. "The Optimal Accuracy Level in Asymmetric Contests," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-18, April.

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    More about this item

    Keywords

    Subhastes; Política; Models economètrics; Renda (Teoria econòmica); Eleccions; Jocs; Teoria de; 338 - Situació econòmica. Política econòmica. Gestió; control i planificació de l'economia. Producció. Serveis. Turisme. Preus;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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