Best-of-Three All-Pay Auctions

Aner Sela

No 7224, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a three-stage all-pay auction with two players in which the first player to win two matches wins the best-of-three all-pay auction. The players have values of winning the contest and may have also values of losing, the latter depending on the stage in which the contest is decided. It is shown that without values of losing, if players are heterogenous (they have different values) the best-of-three all-pay auction is less competitive (the difference between the players' probabilities to win is larger) as well as less productive (the players' total expected effort is smaller) than the one-stage all-pay auction. If players are homogenous, however, the productivity and obviously the competitiveness of the best-of-three all-pay auction and the one-stage all-pay auction are identical. These results hold even if players have values of losing that do not depend on the stage in which the contest is decided. However, the best-of-three all-pay auction with different values of losing over the contest's stages may be more productive than the one-stage all-pay auction.

Keywords: All-pay auctions; Contests (search for similar items in EconPapers)
JEL-codes: D44 D72 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-gth
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Related works:
Journal Article: Best-of-three all-pay auctions (2011)
Working Paper: BEST-OF-THREE ALL-PAY AUCTIONS (2009)
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