All-Pay Auctions: Implementation and Optimality

Armin Schmutzler and Jönsson, Stefan

No 9323, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper analyzes how all-pay auctions with endogenous prizes can be used to provide effort incentives. We show that wide classes of effort distributions can be implemented as equilibrium outcomes of such games. We also ask how all-pay auctions have to be structured so as to induce high expected highest efforts without generating excessive wasteful efforts of losers. All-pay auctions with endogenous prizes can do better than all-pay auctions with fixed prizes in this respect, in particular, when the prize function is approximately linear. We use the results to compare patents and prizes as innovation incentives, and to explore promotion incentives in organizations.

Keywords: All-pay auctions; Contests; Endogenous prizes; Implementation (search for similar items in EconPapers)
JEL-codes: D02 D43 D44 (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: All-pay auctions: Implementation and optimality (2013)
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