Abstract
This note analyzes a two-player all-pay auction with incomplete information. More precisely, one bidder is uncertain about the size of the initial advantage of his rival modeled as a head start in the auction.
I derive the unique Bayesian Nash equilibrium outcome for a large class of cumulative distribution functions of the head start. The stronger player generates an informational rent if and only if his head start distribution is not stochastically dominated by a uniform distribution. I identify why my results for an uncertain head start differ qualitatively from uncertainty about a cost function or a valuation.
I derive the unique Bayesian Nash equilibrium outcome for a large class of cumulative distribution functions of the head start. The stronger player generates an informational rent if and only if his head start distribution is not stochastically dominated by a uniform distribution. I identify why my results for an uncertain head start differ qualitatively from uncertainty about a cost function or a valuation.
Original language | English |
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Pages (from-to) | 330-338 |
Number of pages | 9 |
Journal | Games and Economic Behavior |
Volume | 86 |
DOIs | |
Publication status | Published - Jul 2014 |
Keywords
- All-pay contests
- Head start
- Asymmetric information
- INCOMPLETE INFORMATION
- CONTESTS