All-pay auctions: Implementation and optimality
This paper analyzes how all-pay auctions with endogenous prizes can be used to provide effort incentives. We show that wide classes of effort distributions can be implemented as equilibrium outcomes of such games. We also ask how all-pay auctions have to be structured so as to induce high expected highest efforts without generating excessive wasteful efforts of losers. All-pay auctions with endogenous prizes can do better than all-pay auctions with fixed prizes in this respect, in particular, when the prize function is approximately linear. We use the results to compare patents and prizes as innovation incentives, and to explore promotion incentives in organizations.
|Date of creation:||Jan 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +41-1-634 21 37
Fax: +41-1-634 49 82
Web page: http://www.econ.uzh.ch/Email:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chen Cohen & Todd R. Kaplan & Aner Sela, 2008.
"Optimal rewards in contests,"
RAND Journal of Economics,
RAND Corporation, vol. 39(2), pages 434-451.
- Chung, Tai-Yeong, 1996. " Rent-Seeking Contest When the Prize Increases with Aggregate Efforts," Public Choice, Springer, vol. 87(1-2), pages 55-66, April.
- Todd Kaplan, 2001.
"All-Pay Auctions with Variable Rewards,"
0109, Exeter University, Department of Economics.
- Michael Baye & Dan Kovenock & Casper Vries, 2012.
"Contests with rank-order spillovers,"
Springer, vol. 51(2), pages 315-350, October.
- Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2008. "Contests with Rank-Order Spillovers," Working Papers 2008-20, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Baye, Michael R. & Kovenock, Dan & Vries, Casper G. de, 2009. "Contests with rank-order spillovers," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-09, Social Science Research Center Berlin (WZB).
- Benny Moldovanu & Aner Sela, 2001.
"The Optimal Allocation of Prizes in Contests,"
American Economic Review,
American Economic Association, vol. 91(3), pages 542-558, June.
- Donja Darai & Dario Sacco & Armin Schmutzler, 2010.
"Competition and innovation: an experimental investigation,"
Springer, vol. 13(4), pages 439-460, December.
- Dario Sacco & Armin Schmutzler, 2008. "Competition and Innovation: An Experimental Investigation," SOI - Working Papers 0807, Socioeconomic Institute - University of Zurich.
- Donja Darai & Dario Sacco & Armin Schmutzler, 2009. "Competition and Innovation: An Experimental Investigation," SOI - Working Papers 0608, Socioeconomic Institute - University of Zurich, revised Apr 2007.
- Kaplan, Todd R. & Luski, Israel & Wettstein, David, 2003.
"Innovative activity and sunk cost,"
International Journal of Industrial Organization,
Elsevier, vol. 21(8), pages 1111-1133, October.
- Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, March.
- Ron Siegel, 2010. "Asymmetric Contests with Conditional Investments," American Economic Review, American Economic Association, vol. 100(5), pages 2230-60, December.
When requesting a correction, please mention this item's handle: RePEc:zur:econwp:108. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marita Kieser)
If references are entirely missing, you can add them using this form.