Elastic contests and the robustness of the all-pay auctions

Christian Ewerhart

No 155, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper studies a large class of imperfectly discriminating contests, referred to as elastic contests, that induce players to either overbid a standing bid or to abstain from bidding altogether. Many common forms of contest are elastic. In any equilibrium of an elastic contest, there is complete rent dissipation for all but at most one player. This result is used to show that in any suffciently decisive anonymous standard contest, any equilibrium is an all-pay auction equilibrium. Thus, the analysis offers strong support for the robustness of the all-pay auction. The approach also delivers definite answers regarding the extent of rent dissipation in Tullock contests with intermediate values of the decisiveness parameter.

Keywords: Contests, all-pay auction; rent-seeking, mixed nash equilibrium, rent dissipation (search for similar items in EconPapers)
JEL-codes: C72 D45 D72 L12 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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