Bertoletti, Paolo (2006): On the reserve price in all-pay auctions with complete information and lobbying games.
Download (199kB) | Preview
We show that the seller’s optimal reserve price in an all-pay auction with complete information is higher than in a standard auction. We use our results to re-consider some findings of the literature that models lobbying games as all-pay auctions. In particular, we show that the so-called Exclusion Principle appears to rely crucially on the implicit assumption of a “weak” (in terms of bargaining power) seller, and does not hold if she regards bidders’ valuations as iid according to a monotonic hazard rate. Our preliminary results for the case of independent but asymmetric bidders make it even more suspicious.
|Item Type:||MPRA Paper|
|Institution:||Dipartimento di Economia Politica e Metodi quantitativi, University of Pavia|
|Original Title:||On the reserve price in all-pay auctions with complete information and lobbying games|
|Keywords:||all-pay auctions; reserve price; economic theory of lobbying|
|Subjects:||D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
|Depositing User:||Paolo Bertoletti|
|Date Deposited:||07. Dec 2006|
|Last Modified:||13. Feb 2013 14:14|
Baye, M. R., Kovenock, D. and de Vries, C. G. (1993) Rigging the lobbying process: An application of the all-pay auction, American Economic Review, 83, 289-94. Baye, M. R., Kovenock, D. and de Vries, C. G. (1996) The all-pay auction with complete information, Economic Theory, 8, 291-305. Bertoletti, P. (2005) A note on the Exclusion Principle, Pavia: mimeo; available at the website <http://economia.unipv.it/bertoletti/papers/banning.pdf>. Boylan, T. B. (2000) An optimal auction perspective on lobbying, Social Choice and Welfare, 17, 55-68. Bulow, J. and Klemperer, P. (1996), Auctions versus negotiations, American economic Review, 86, 180-94. Che, Y. K. and Gale, I. (1998) Caps on political lobbying, American Economic Review, 88, 643-51. Fang, H. (2002) Lottery versus all-pay auction models of lobbying, Public Choice, 112, 351-71. Hillman, A. L. and Riley, J. G. (1989) Politically contestable rents and transfers, Economics and Politics, 1, 17-39. Klemperer, P. (2004) Auctions: Theory and Practice, Princeton: Princeton University Press. Krishna, V. (2002) Auction Theory, San Diego: Academic Press. Menicucci, D. (2005) Banning bidders from all-pay auctions, Economic Theory, forthcoming. Milgrom, P. (1987) Auction theory, in T. F. Bewley (ed.) Advances in Economic Theory, Cambridge (UK): Cambridge University Press, 1-32. Moldovanu, B. and Sela, A. (2001) The optimal allocation of prizes in contests, American Economic Review, 91, 542-58. Myerson, R. B. (1981) Optimal Auction Design, Mathematics of Operations Research, 6, 58-73. Shaked, M. and Shanthikumar, J. G. (1994) Stochastic Orders and Their Applications, San Diego: Academic Press. Tullock, G. (1980) Efficient rent seeking, in J. M. Buchanan, R. D. Tollison and G. Tullock (eds.) Toward a Theory of the Rent Seeking Society, College Station (TX): Texas A&M University Press, 97-112.