The role of the second prize in all-pay auctions with two heterogeneous prizes

Chen Cohen, David Lagziel, Ofer Levi and Aner Sela

Journal of Mathematical Economics, 2023, vol. 105, issue C

Abstract: We study complete information all-pay contests with n players and two heterogeneous prizes with distinct values. Among the players, n−1 are symmetric (i.e., they evaluate the prizes in a similar manner), whereas the remaining player has different valuations for each of the prizes. Our analysis focuses on the equilibrium profiles and expected payoffs for the case of three players. We also partially extend our analysis for cases with additional players. Our results show that in all-pay auctions with heterogeneous prizes, the ordering of the players according to their expected payoffs in equilibrium might vary significantly, depending on both prizes. Furthermore, although the values for the first (larger) prize have the greatest effect on the identity of the players with positive expected payoffs, the value of the second prize might have a non-negligible effect.

Keywords: All-pay contests; Multiple prizes; Complete information (search for similar items in EconPapers)
JEL-codes: D44 D82 J31 J41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:105:y:2023:i:c:s0304406823000137

DOI: 10.1016/j.jmateco.2023.102820

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