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Discussion Paper Details

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Full Details

Title: Contests with Insurance

Author(s): Yizhaq Minchuk and Aner Sela

Publication Date: November 2017

Keyword(s): all-pay auctions, Contests, Insurance and reimbursement

Programme Area(s): Industrial Organization

Abstract: We study all-pay auctions under incomplete information where contestants have non-linear effort functions. Before the contest begins, the designer offers the option of insurance for which a contestant pays a premium for the contest designer who reimburses this contestant's cost of effort if he does not win. We demonstrate that contests with insurance may be profitable for a designer who wishes to maximize his expected revenue as based on the contestants expected total effort, the premium of the insured contestants, and their reimbursement.

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Bibliographic Reference

Minchuk, Y and Sela, A. 2017. 'Contests with Insurance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12456