All–Pay Auctions with Variable Rewards

Todd Kaplan, Israel Luski, Aner Sela and David Wettstein

Journal of Industrial Economics, 2002, vol. 50, issue 4, 417-430

Abstract: We study all–pay auctions with variable rewards under incomplete information. In standard models, a reward depends on a bidder’s privately known type; however, in our model it is also a function of his bid. We show that in such models there is a potential for paradoxical behavior where a reduction in the rewards or an increase in costs may increase the expected sum of bids or alternatively the expected highest bid.

Date: 2002
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https://doi.org/10.1111/1467-6451.00184

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