On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints

Maciej Kotowski and Fei Li ()
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Fei Li: Department of Economics, University of Pennsylvania

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We consider all-pay auctions in the presence of interdependent, affiliated valuations and private budget constraints. For the sealed-bid, all-pay auction we characterize a symmetric equilibrium in continuous strategies for the case of N bidders and we investigate its properties. Budget constraints encourage more aggressive bidding among participants with large endowments and intermediate valuations. We extend our results to the war of attrition where we show that budget constraints lead to a uniform amplification of equilibrium bids among bidders with sufficient endownments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two mechanisms is generally not possible.

Keywords: All-Pay Auction; War of Attrition; Budget Constraints; Common Values; Private Values; Affiliation; Contests (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012-04-23
New Economics Papers: this item is included in nep-cta and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints (2014)
Working Paper: On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:12-019

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