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Discussion Paper Details

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Title: Caps in Sequential Contests

Author(s): Reut Megidish and Aner Sela

Publication Date: June 2010

Keyword(s): All-pay auctions, Bid caps and Multi-stage contests

Programme Area(s): Industrial Organization

Abstract: We study a sequential two-stage all-pay auction with two identical prizes. In each stage, the players compete for one prize and each player may win either one or two prizes. The designer may impose a cap on the players' bids in each of the stages. We analyze the equilibrium in this sequential all-pay auction with bid caps and show that capping the players' bids is profitable for a designer who wishes to maximize the players' expected total bid.

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Bibliographic Reference

Megidish, R and Sela, A. 2010. 'Caps in Sequential Contests'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7874