The best-shot all-pay (group) auction with complete information

Stefano Barbieri (), David Malueg () and Iryna Topolyan ()

Economic Theory, 2014, vol. 57, issue 3, 603-640

Abstract: We analyze an all-pay group contest in which individual members’ efforts are aggregated via the best-shot technology and the prize is a public good for the winning group. The interplay of within-group free-riding and across-group competition allows for a wide variety of equilibria, according to how well groups overcome internal free-riding. In contrast with the existing literature, we derive equilibria of a symmetric model in which multiple agents per group are active. Our findings differ qualitatively from those of the individualistic all-pay auction: rents are not necessarily dissipated in equilibrium, total expected efforts vary across equilibria, and participation is expected to be greater. Moreover, equilibria with greater symmetry of behavior within a group are shown to have more “wasted” effort but also greater payoffs as overall efforts are lower. In contrast to standard economic intuition, free-riding can be beneficial for players as it reduces competition among groups. Examples of asymmetric group contests are also studied. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: All-pay auction; Group contest; Free-riding; Volunteer’s dilemma; Group-size paradox; Private provision of public goods; C72; D62; D72; H41 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (34)

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DOI: 10.1007/s00199-014-0847-6

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