Pastine, Ivan and Pastine, Tuvana (2023) Equilibrium existence and expected payoffs in all-pay auctions with constraints. Economic Theory, 75 (4). pp. 983-1007. ISSN 0938-2259

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Abstract

This paper introduces constraints on player choices in a broad class of all-pay auctions by allowing for upper bounds on players’ strategy sets. It proves the existence of equilibrium and derives simple closed-form formulae for players’ expected payoffs in any equilibrium. These formulae are straightforward to calculate in applications and do not require the derivation of the equilibrium or equilibria. This may be useful because: (i) In some applications players’ expected payoffs are the main item of interest. For example, one may be concerned about the effect of a policy on the market participants. In these cases the results can be used directly, bypassing the need for the full derivation of the equilibrium. (ii) In all-pay auctions, equilibrium is typically in mixed strategies. So in applications where the full characterization of the equilibrium is of interest, finding the players’ expected payoffs is a crucial first step in the derivation of the equilibrium.

Item Type:	Article
Keywords:	Rent seeking; Lobbying; Contest; Bid caps; Limits; Asymmetric contest;
Academic Unit:	Faculty of Social Sciences > Economics, Finance and Accounting
Item ID:	18646
Identification Number:	https://doi.org/10.1007/s00199-022-01433-5
Depositing User:	Tuvana Pastine
Date Deposited:	11 Jun 2024 14:45
Journal or Publication Title:	Economic Theory
Publisher:	Springer
Refereed:	Yes
URI:	Publisher
Use Licence:	This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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