On the reserve price in all-pay auctions with complete information and lobbying games

Bertoletti, Paolo (2006): On the reserve price in all-pay auctions with complete information and lobbying games.

Abstract

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
• Language: English
• 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

References

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