All-Pay Auctions with Handicaps1
2012
This paper analyzes an all-pay auction with incomplete information, where the winner is determined by the sum of the bid and a handicap endowed to all players. The bidding strategy in the equilibrium is then explicitly derived as a “piecewise affine transformation” of the equilibrium strategy in the all-pay auction without handicaps. The paper also discusses the allocation rule implemented in the equilibrium and compares the resulting revenue. JEL Classification Codes: D44, D82, D86.
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