All-pay auctions with variable rewards
Kaplan, Todd R.
University of Exeter
Ben Gurion University of the Negev
Journal of Industrial Economics
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.
Available online from Blackwell Synergy
Journal of Industrial Economics, December 2002 L (4): 417-430