The All Pay. Common Value Auction as a Model of Contests

An all pay, common value auction is proposed as a model of contests. The common value of the prize is ex-ante unknown, but each contestant has private information about its true value. These private information are affiliated. Unlike in the symmetric winner pay auction model of Milgrom and Weber (1...

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Main Author:	Nungsari, Ahmad Radhi
Format:	Thesis
Language:	eng eng
Published:	1994
Subjects:	HF5001-6182 Business
Online Access:	https://etd.uum.edu.my/630/1/Nungsari_Ahmad_Radhi.pdf https://etd.uum.edu.my/630/2/Nungsari_Ahmad_Radhi_94.pdf
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id	my-uum-etd.630
record_format	uketd_dc
spelling	my-uum-etd.6302021-05-18T02:33:56Z The All Pay. Common Value Auction as a Model of Contests 1994-12 Nungsari, Ahmad Radhi Faculty of Business Management Faculty of Business Management HF5001-6182 Business An all pay, common value auction is proposed as a model of contests. The common value of the prize is ex-ante unknown, but each contestant has private information about its true value. These private information are affiliated. Unlike in the symmetric winner pay auction model of Milgrom and Weber (1982). The affiliation assumption is not sufficient to ensure the existence of an increasing equilibrium bid. The all pay auction is shown to require a stronger condition; a joint restriction on the expected valuation of the prize and the beliefs bidders have of each other’s estimates of the prize. Equilibrium bids are increasing if there is not too strong a degree of affiliation and the expected value of the prize is increasing sufficiently rapidly in each bidder’s type. When there exists an increasing equilibrium, the equilibrium is unique even in the asymmetric bidder case. The results extend to the all pay private values auction which is obtained as a special case. The all pay and winner pay auctions are then compared at the symmetric equilibrium. With increasing equilibrium bids, it is possible to order the expected revenues from the two auctions. This was first proposed by Amann and Leininger (1994). It is shown by way of an example that although sufficient, monotonicity of equilibrium bids is not a necessary condition for the ordering. Without monotonicity, however comparing the two auctions can lead to conclusions which are not robust. Two examples are provided to compare the role of affiliation and the effects of nonmonotonicity in the all pay and winner pay auctions. 1994-12 Thesis https://etd.uum.edu.my/630/ https://etd.uum.edu.my/630/1/Nungsari_Ahmad_Radhi.pdf text eng staffonly https://etd.uum.edu.my/630/2/Nungsari_Ahmad_Radhi_94.pdf text eng public https://docs.lib.purdue.edu/etd/ other doctoral Purdue University
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
topic	HF5001-6182 Business
spellingShingle	HF5001-6182 Business Nungsari, Ahmad Radhi The All Pay. Common Value Auction as a Model of Contests
description	An all pay, common value auction is proposed as a model of contests. The common value of the prize is ex-ante unknown, but each contestant has private information about its true value. These private information are affiliated. Unlike in the symmetric winner pay auction model of Milgrom and Weber (1982). The affiliation assumption is not sufficient to ensure the existence of an increasing equilibrium bid. The all pay auction is shown to require a stronger condition; a joint restriction on the expected valuation of the prize and the beliefs bidders have of each other’s estimates of the prize. Equilibrium bids are increasing if there is not too strong a degree of affiliation and the expected value of the prize is increasing sufficiently rapidly in each bidder’s type. When there exists an increasing equilibrium, the equilibrium is unique even in the asymmetric bidder case. The results extend to the all pay private values auction which is obtained as a special case. The all pay and winner pay auctions are then compared at the symmetric equilibrium. With increasing equilibrium bids, it is possible to order the expected revenues from the two auctions. This was first proposed by Amann and Leininger (1994). It is shown by way of an example that although sufficient, monotonicity of equilibrium bids is not a necessary condition for the ordering. Without monotonicity, however comparing the two auctions can lead to conclusions which are not robust. Two examples are provided to compare the role of affiliation and the effects of nonmonotonicity in the all pay and winner pay auctions.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Nungsari, Ahmad Radhi
author_facet	Nungsari, Ahmad Radhi
author_sort	Nungsari, Ahmad Radhi
title	The All Pay. Common Value Auction as a Model of Contests
title_short	The All Pay. Common Value Auction as a Model of Contests
title_full	The All Pay. Common Value Auction as a Model of Contests
title_fullStr	The All Pay. Common Value Auction as a Model of Contests
title_full_unstemmed	The All Pay. Common Value Auction as a Model of Contests
title_sort	all pay. common value auction as a model of contests
granting_institution	Purdue University
granting_department	Faculty of Business Management
publishDate	1994
url	https://etd.uum.edu.my/630/1/Nungsari_Ahmad_Radhi.pdf https://etd.uum.edu.my/630/2/Nungsari_Ahmad_Radhi_94.pdf
_version_	1747826960411656192

The All Pay. Common Value Auction as a Model of Contests

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