All-pay auctions with extra prize: A partial exclusion principle

Arbeitspapier

This paper studies the effects of a specific affirmative action policy in complete information all-pay auctions when players differ in ability. We call this policy an extra prize. The contest organiser splits the prize of the competition into a main prize and an extra prize. Extra prizes differ from second prizes, because they are targeted towards disadvantaged (low-ability) agents. We consider a setting with one high-ability and two low-ability contestants and fully characterise equilibrium. Assuming that the contest organiser aims to maximise expected total effort, we show that (i) almost any extra prize is preferable to a standard all-pay auction without extra prize; (ii) the exclusion principle (Baye, Kovenock and de Vries, 1993) can be implemented by a wide range of sufficiently large extra prizes; and (iii) partial exclusion by means of an appropriately chosen extra prize benefits the organiser more than complete exclusion.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CeDEx Discussion Paper Series ; No. 2017-01

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Labor Discrimination: Public Policy
• Subject: asymmetric contests ; multi-prize contests ; equality of opportunity ; affirmative action ; discrimination ; prize structure ; exclusion principle

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dahm, Matthias
• Event: Veröffentlichung
• (who): The University of Nottingham, Centre for Decision Research and Experimental Economics (CeDEx)
• (where): Nottingham
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/163022
• Last update: 10.03.2025, 11:45 AM CET