Caps in Sequential Contests

Aner Sela and Reut Megidish

No 7874, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study a sequential two-stage all-pay auction with two identical prizes. In each stage, the players compete for one prize and each player may win either one or two prizes. The designer may impose a cap on the players' bids in each of the stages. We analyze the equilibrium in this sequential all-pay auction with bid caps and show that capping the players' bids is profitable for a designer who wishes to maximize the players' expected total bid.

Keywords: All-pay auctions; Bid caps; Multi-stage contests (search for similar items in EconPapers)
JEL-codes: D44 D82 J31 J41 (search for similar items in EconPapers)
Date: 2010-06
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Related works:
Journal Article: CAPS IN SEQUENTIAL CONTESTS (2014)
Working Paper: CAPS IN SEQUENTIAL CONTESTS (2010)
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