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Monotone equilibrium of two-bidder all-pay auctions Redux

Jingfeng Lu () and Sérgio O. Parreiras

Games and Economic Behavior, 2017, vol. 104, issue C, 78-91

Abstract: In this paper, we revisit the two-bidder asymmetric all-pay auction of Amann and Leininger (1996) by allowing interdependent values and correlated signals. Both values and signals are distributed on continuous supports. We provide conditions for the existence and uniqueness of a monotone pure-strategy equilibrium (MPSE), and constructively characterize the MPSE when it exists. We find that given the marginal distributions of the signals, the equilibrium allocation is solely determined by how bidders' values depend on their signals. In particular, the equilibrium allocation does not depend on how bidders' signals are correlated.

Keywords: All-pay auctions; Asymmetries; Contests; Correlated signals; Interdependent valuations (search for similar items in EconPapers)
JEL-codes: D44 D82 D72 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:gamebe:v:104:y:2017:i:c:p:78-91