Resource title

When Bidding More is Not Enough: All-Pay Auctions with Handicaps

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Resource description

We consider a standard two-player all-pay auction with private values, where the valuation for the object is private information to each bidder. The crucial feature is that one bidder is favored by the allocation rule in the sense that he need not bid as much as the other bidder to win the auction. Analogously, the other bidder is handicapped by the rule as overbidding the rival may not be enough to win the auction. Clearly, this has important implications on equilibrium behavior. We fully characterize the equilibrium strategies for this auction format and show that there exists a unique pure strategy Bayesian Nash Equilibrium.

Resource author

Eberhard Feess, Gerd Muehlheusser, Markus Walzl

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Resource publish date

Resource language

eng

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text/html

Resource resource URL

http://hdl.handle.net/10419/22824

Resource license

Adapt according to the presented license agreement and reference the original author.