 Bid Caps and Disclosure PoliciesBo Chen and Marco Serena Working Papers from Max Planck Institute for Tax Law and Public Finance Abstract: We examine the effect of publicly disclosing or concealing bidders’ types in an all-pay auction with a common bid cap. We call partial (full) disclosure policy the setup where the contest designer’s disclosure policy is (not) contingent on type realization. Despite a bid cap possibly increasing the expected expenditures under a partial disclosure policy and the expected expenditures of low-types under a policy of full disclosure, the bid cap unambiguously decreases the expected total expenditures, regardless of the disclosure policy. For any given bid cap and allowing for full and partial disclosure policies, we ï¬ nd that expenditures are minimized with the policy in which a designer discloses bidders’ types only if both players have a low valuation of the prize. The expenditures are maximized with the full concealment policy or with the policy in which a designer discloses the information only if both players have a high valuation. All in all, when the designer can choose both the disclosure policy and the bid cap, revenue is maximized employing full concealment with no bid cap. Keywords: contest; all-pay auction; stochastic abilities; bid cap; disclosure (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mpi:wpaper:tax-mpg-rps-2020-08 Access Statistics for this paper More papers in Working Papers from Max Planck Institute for Tax Law and Public Finance Contact information at EDIRC. |
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