Premium
All–Pay Auctions with Variable Rewards
Author(s) -
Kaplan Todd,
Luski Israel,
Sela Aner,
Wettstein David
Publication year - 2002
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00184
Subject(s) - common value auction , variable (mathematics) , microeconomics , unique bid auction , economics , function (biology) , econometrics , mathematics , auction theory , mathematical analysis , evolutionary biology , biology
We study all–pay auctions with variable rewards under incomplete information. In standard models, a reward depends on a bidder’s privately known type; however, in our model it is also a function of his bid. We show that in such models there is a potential for paradoxical behavior where a reduction in the rewards or an increase in costs may increase the expected sum of bids or alternatively the expected highest bid.