1 / 46

All-pay Auctions: Complete Information

All-pay Auctions: Complete Information. All-pay auctions: r = oo. Plan. All-pay Auctions: Complete Information: Characterization of the set of NE Baye, Kovenock, and De Vries (ET, 1996) Hillman and Samet (PC, 1987) Hillman and Riley (EP, 1989) Exclusion principle

steffi
Download Presentation

All-pay Auctions: Complete Information

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. All-pay Auctions: Complete Information • All-pay auctions: r = oo

  2. Plan All-pay Auctions: Complete Information: • Characterization of the set of NE Baye, Kovenock, and De Vries (ET, 1996) Hillman and Samet (PC, 1987) Hillman and Riley (EP, 1989) • Exclusion principle Baye, Kovenock, and De Vries (AER, 1993) • Caps Che and Gale (AER, 1998) All-pay Auctions: (In)Complete Information: • Banning bidders from all-pay auctions Menicucci (ET,2006)

  3. All-pay Auctions: Complete Information Baye, Kovenock, and De Vries, Economic Theory (1996): “The all-pay auction with complete information.”

  4. Baye, Kovenock, and De Vries (1996) • All-pay auctions: Applications • Lobbying • Technological competition and R&D • Political campaigns

  5. Baye, Kovenock, and De Vries (1996) • Main Result: Characterize the set of Nash equilibria in the first price all-pay auction with complete information • If v1 = … = vn, there exists a unique symmetric equilibrium and a continuum of asymmetric equilibria • If v1 > v2 > v3, there exists a unique equilibrium

  6. v1 = … = vn = V • Hillman and Samet (PC, 1987)

  7. Baye, Kovenock, and De Vries (1996)

  8. Hillman and Samet (PC, 1987)

  9. Baye, Kovenock, and De Vries (1996)

  10. Baye, Kovenock, and De Vries (1996)

  11. All-pay Auctions: Complete Information Baye, Kovenock, and De Vries (AER 1993): “Rigging the lobbying process: An application of the all-pay auction.”

  12. Baye, Kovenock, and De Vries (AER 1993) • The Model:

  13. Baye, Kovenock, and De Vries (AER 1993) • Preliminary results: Exclusion principle

  14. The Model • n > 2 lobbyists • Politician maximizes

  15. The Model • Lobbyist i’s payoff

  16. Results

  17. Results

  18. Hillman and Riley (1989)

  19. Results • Theorem 1 and Lemma 1 give

  20. Selection of Finalists

  21. Selection of Finalists

  22. Selection of Finalists

  23. Selection of Finalists

  24. Selection of Finalists

  25. Selection of Finalists

  26. Selection of Finalists: Example

  27. All-pay Auctions: Caps Che and Gale (AER, 1998): “Caps on Political Lobbying”

  28. Motivation: Caps Little is known about the impact of contribution limits on aggregate expenditures

  29. Preliminary Results: A cap on campaign contributions may increase aggregate expenditures

  30. Preliminary Results: Intuition When a cap constraints the high-valuation lobbyist, a lobbyist with a lower valuation becomes relatively more aggressive. (Similar to the Exclusion Principle)

  31. Che and Gale (1998): Model • 2 risk-neutral lobbyists v1 > v2 > 0 • A politician • self-interested • Benevolent • All-pay auction with exogenous cap on bids

  32. Che and Gale (1998): Intuition

  33. Equilibrium with Caps • m – maximum allowable bid v2 > m > 0

  34. Equilibrium with Caps

  35. Equilibrium with Caps

  36. Equilibrium with Caps

  37. Equilibrium with Caps

  38. Equilibrium with Caps

  39. Equilibrium Distribution Functions

  40. Equilibrium with Caps

  41. Results

  42. Equilibrium with Caps

  43. Results: Expected Revenue

  44. Equilibrium with Caps

  45. Additional Bidders • n risk-neutral lobbyists v1 > v2 > … > vn > 0 No caps: 2 active bidders Suppose that vk/k > m > vk+1/(k+1) for some k < n There is an equilibrium with expected revenue of km. First k bid m. The expected revenue may again rise!

More Related