The Best-Shot All-Pay (Group) Auction with Complete Information

39 Pages Posted: 16 Sep 2013

See all articles by Stefano Barbieri

Stefano Barbieri

Tulane University - Department of Economics

David A. Malueg

University of California Riverside

Iryna Topolyan

Mississippi State University

Date Written: September 6, 2013

Abstract

We analyze an all-pay group contest problem in which individual members' efforts are aggregated via the best-shot technology and the prize is a public good for the winning group. The interplay of within-group free-riding and across-group competition allows for a wide variety of equilibria, according to how well groups are able to overcome internal free-riding. In a symmetric model we derive equilibria in which multiple agents per group are active, in contrast with the existing literature. Our findings differ qualitatively from those of the individualistic all-pay auction: rents are not necessarily dissipated in equilibrium, total expected efforts vary across equilibria, and participation is expected to be greater. Moreover, equilibria with greater symmetry of behavior within a group are shown to have more "wasted" effort but also greater payoffs as overall efforts are lower. In contrast to many results in the literature, free-riding can be beneficial for players as it reduces competition among groups. Examples of asymmetric group contests are also studied.

Keywords: all-pay auction, free riding, volunteer's dilemma, group-size paradox, private provision of public goods

JEL Classification: D61, D82, H41

Suggested Citation

Barbieri, Stefano and Malueg, David A. and Topolyan, Iryna, The Best-Shot All-Pay (Group) Auction with Complete Information (September 6, 2013). Available at SSRN: https://ssrn.com/abstract=2326211 or http://dx.doi.org/10.2139/ssrn.2326211

Stefano Barbieri

Tulane University - Department of Economics ( email )

New Orleans, LA 70118
United States

David A. Malueg (Contact Author)

University of California Riverside ( email )

Economics Department
3136 Sproul Hall
Riverside, CA 92505
United States
951 827 1494 (Phone)

Iryna Topolyan

Mississippi State University ( email )

Mississippi State, MS 39762-0964
United States

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