On Optimal Head Starts in All-Pay Auctions

11 Pages Posted: 21 Mar 2014 Last revised: 17 Apr 2014

See all articles by Christian Seel

Christian Seel

Maastricht University

Cédric Wasser

University of Basel - Faculty of Business and Economics

Date Written: April 16, 2014

Abstract

We consider a two-player all-pay auction with symmetric independent private values that are uniformly distributed. The designer chooses the size of a head start that is given to one of the players. The designer's objective is to maximize a convex combination of the expected highest effort and the expected aggregate effort. Unless the weight on the highest effort is one, small head starts are always worse than no head start. Moreover, the optimal head start is strictly positive if and only if the weight on the highest effort is large enough.

Keywords: Contest, All-pay auction, Head start

JEL Classification: C72, D44, D74, D82

Suggested Citation

Seel, Christian and Wasser, Cédric, On Optimal Head Starts in All-Pay Auctions (April 16, 2014). Available at SSRN: https://ssrn.com/abstract=2411652 or http://dx.doi.org/10.2139/ssrn.2411652

Christian Seel

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands
0031 433883651 (Phone)

Cédric Wasser (Contact Author)

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

HOME PAGE: http://www.cedricwasser.net

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