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

Maciej Kotowski and Fei Li ()

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

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. 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 endowments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two auction formats is generally not possible. Equilibria with discontinuous bidding strategies are discussed.

Keywords: All-Pay Auction; War of Attrition; Budget Constraints; Common Values; Private Values; Affiliation; Contests (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2012-04-23, Revised 2014-01-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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