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Correlated Equilibria and Communication Equilibria in All-pay Auctions

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Abstract

We study cheap-talk pre-play communication in the static all-pay auctions. For the case of two bidders, all correlated and communication equilibria are payoff equivalent to the Nash equilibrium if there is no reserve price, or if it is commonly known that one bidder has a strictly higher value. Hence, in such environments the Nash equilibrium predictions are robust to preplay communication between the bidders. If there are three or more symmetric bidders, or two symmetric bidders and a positive reserve price, then there may exist correlated and communication equilibria such that the bidders’ payoffs are higher than in the Nash equilibrium. In these cases, pre-play cheap talk may affect the outcomes of the game, since the bidders have an incentive to coordinate on such equilibria.

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  • Gregory Pavlov, 2013. "Correlated Equilibria and Communication Equilibria in All-pay Auctions," University of Western Ontario, Departmental Research Report Series 20132, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:20132
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    Cited by:

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    2. Ori Haimanko, 2022. "Equilibrium existence in two-player contests without absolute continuity of information," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(1), pages 27-39, May.
    3. Barbieri, Stefano & Topolyan, Iryna, 2024. "Correlated play in weakest-link and best-shot group contests," Journal of Mathematical Economics, Elsevier, vol. 110(C).
    4. Ezra Einy & Ori Haimanko & David Lagziel, 2022. "Strong robustness to incomplete information and the uniqueness of a correlated equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 91-119, February.

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    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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