Abstract

http://ssrn.com/abstract=2053311
 
 

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


Maciej H. Kotowski


Harvard University - Harvard Kennedy School (HKS)

Fei Li


University of North Carolina (UNC) at Chapel Hill

April 23, 2012

PIER Working Paper No. 12-019

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.

Number of Pages in PDF File: 44

Keywords: All-Pay Auction, War of Attrition, Budget Constraints, Common Values, Private Values, Affiliation, Contests

JEL Classification: D44

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Date posted: May 7, 2012  

Suggested Citation

Kotowski, Maciej H. and Li, Fei, On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints (April 23, 2012). PIER Working Paper No. 12-019. Available at SSRN: http://ssrn.com/abstract=2053311 or http://dx.doi.org/10.2139/ssrn.2053311

Contact Information

Maciej H. Kotowski
Harvard University - Harvard Kennedy School (HKS) ( email )
79 John F. Kennedy Street
Cambridge, MA 02138
United States
Fei Li (Contact Author)
University of North Carolina (UNC) at Chapel Hill ( email )
Chapel Hill, NC 27599
United States
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Citations:  1
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