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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Elastic contests and the robustness of the all-pay auction
Organization Unit
  • Christian Ewerhart
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 155
ISSN 1664-7041
Number of Pages 43
Date 2014
Abstract Text This paper studies a large class of imperfectly discriminating contests, referred to as elastic contests, that induce players to either overbid a standing bid or to abstain from bidding altogether. Many common forms of contest are elastic. In any equilibrium of an elastic contest, there is complete rent dissipation for all but at most one player. This result is used to show that in any suffciently decisive anonymous standard contest, any equilibrium is an all-pay auction equilibrium. Thus, the analysis offers strong support for the robustness of the all-pay auction. The approach also delivers definite answers regarding the extent of rent dissipation in Tullock contests with intermediate values of the decisiveness parameter.
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Keywords Contests, all-pay auction, rent-seeking, mixed Nash equilibrium, rent dissipation, Rent Seeking, Auktionstheorie, Verhalten, Verhaltensökonomie