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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title All-pay auctions: Implementation and optimality
Organization Unit
  • Stefan Jönsson
  • Armin Schmutzler
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 108
ISSN 1664-7041
Number of Pages 44
Date 2013
Abstract Text This paper analyzes how all-pay auctions with endogenous prizes can be used to provide effort incentives. We show that wide classes of effort distributions can be implemented as equilibrium outcomes of such games. We also ask how all-pay auctions have to be structured so as to induce high expected highest efforts without generating excessive wasteful efforts of losers. All-pay auctions with endogenous prizes can do better than all-pay auctions with fixed prizes in this respect, in particular, when the prize function is approximately linear. We use the results to compare patents and prizes as innovation incentives, and to explore promotion incentives in organizations.
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Keywords Contests, all-pay auctions, endogenous prizes, implementation, Auktionstheorie, Spieltheorie, Anreizsystem