Sequential Elimination in Multi-stage All-pay Auctions

Journal article


Robertson, M. (2024). Sequential Elimination in Multi-stage All-pay Auctions. Economics Letters. 241, p. 111827. https://doi.org/10.1016/j.econlet.2024.111827
AuthorsRobertson, M.
Abstract

I study a multi-stage all-pay auction in which the lowest bidder in each stage is eliminated. Elimination continues until only two bidders remain, one of whom wins the auction. I analyse optimal bidding behaviour and the seller’s expected revenue when bidders have independent and private values. In contrast to typical bidding strategies, the optimal bid in each stage is strictly decreasing in the number of bidders. For a fixed number of bidders, however, bids increase as bidders progress through the stages of the auction. Despite independent values, this multi-stage auction yields less expected revenue to the seller than its single-stage counterpart when there are more than three bidders.

KeywordsAll-pay auctions; Elimination stages ; Expected revenue; Bidding strategies
Year2024
JournalEconomics Letters
Journal citation241, p. 111827
PublisherElsevier
ISSN0165-1765
1873-7374
Digital Object Identifier (DOI)https://doi.org/10.1016/j.econlet.2024.111827
Web address (URL)https://www.sciencedirect.com/science/article/pii/S0165176524003112
Publication dates
Print29 Jun 2024
Online25 Jun 2024
Publication process dates
Accepted20 Jun 2024
Deposited09 Jul 2024
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Open
Accepted author manuscript
License
File Access Level
Controlled
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