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Semi-targeted all-pay auctions: A partial exclusion principle

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journal contribution
posted on 04.09.2019, 10:12 by Matthias Dahm
This paper studies the effects of a specific affirmative action policy in complete information all-pay auctions when players differ in ability. The contest organizer splits the overall prize of the competition into a targeted and an untargeted prize. The targeted prize is exclusively for disadvantaged (low-ability) agents and excludes advantaged agents partially from the overall prize. We consider a setting with one high-ability and two low-ability contestants and fully characterize equilibrium. Assuming that the contest organizer aims to maximize expected total effort, we show that (i) almost any targeted prize is preferable to a standard all-pay auction without targeted prize; (ii) the exclusion principle Baye et al. (1993) can be implemented by a wide range of sufficiently large targeted prizes; and (iii) partial exclusion by means of an appropriately chosen targeted prize benefits the organizer more than complete exclusion. We also discuss the robustness of our results in settings with more than three agents.

History

Citation

International Journal of Industrial Organization, 2018, 61, pp. 256-282

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/School of Business

Version

AM (Accepted Manuscript)

Published in

International Journal of Industrial Organization

Publisher

Elsevier

eissn

1873-7986

Acceptance date

08/09/2018

Copyright date

2018

Publisher version

https://www.sciencedirect.com/science/article/pii/S0167718718300845?via=ihub

Notes

The file associated with this record is under embargo until 24 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.

Language

en