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All-pay aspects of decision making under public scrutiny

Author

Listed:
  • Thomas Giebe
  • Paul Schweinzer

Abstract

We study decision making processes with non-standard all-pay structures. In our first group of applications, individual members of some institution—due to public pressure or expectation—propose reductions of their own income, e.g., corporate board members reducing their bonus payments in an economic downturn, or politicians who reduce their expense allowances after some scandal. In such situations, the most aggressive proposal might carry the day and win public credibility or moral kudos for the proposer. Everyone, however, suffers the cost of that winning proposal. In the second group of applications, all participants bear the total cost of all bids as, e.g., under the filibuster strategy of delaying legislative action. The common features of these situations are a winner-take-all structure, non-standard payment rules, and nonvoluntary participation. We find that, in the equilibria of these games, everybody suffers a loss (with the possible exception of the winner).

Suggested Citation

  • Thomas Giebe & Paul Schweinzer, "undated". "All-pay aspects of decision making under public scrutiny," Discussion Papers 11/27, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:11/27
    as

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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2011/1127.pdf
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    References listed on IDEAS

    as
    1. Kaplan, Todd, et al, 2002. "All-Pay Auctions with Variable Rewards," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 417-430, December.
    2. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2005. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Economic Journal, Royal Economic Society, vol. 115(505), pages 583-601, July.
    3. Emiel Maasland & Sander Onderstal, 2007. "Auctions with Financial Externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 551-574, September.
    4. Bettina Klose & Dan Kovenock, 2015. "The all-pay auction with complete information and identity-dependent externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 1-19, May.
    5. Hopkins Ed & Kornienko Tatiana, 2007. "Cross and Double Cross: Comparative Statics in First Price and All Pay Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-25, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Auctions; Contests; Truth-telling;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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