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
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: |
|
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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