Handicaps in incomplete information all-pay auctions with a diverse set of bidders

Rene Kirkegaard

European Economic Review, 2013, vol. 64, issue C, 98-110

Abstract: In many contests, a subset of contestants is granted preferential treatment which is presumably intended to be advantageous. Examples include affirmative action and biased procurement policies. In this paper, however, I show that some of the supposed beneficiaries may in fact become worse off when the favored group is diverse. The reason is that the other favored contestants become more aggressive, which may outweigh the advantage that is gained over contestants who are handicapped. The contest is modeled as an incomplete-information all-pay auction in which contestants have heterogenous and possibly non-linear cost functions.

Keywords: All-pay auctions; Asymmetric auctions; Contests; Handicaps; Preferential treatment (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:64:y:2013:i:c:p:98-110

DOI: 10.1016/j.euroecorev.2013.08.007

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