DP4951 Allocation of Prizes in Asymmetric All-Pay Auctions

Author(s): Chen Cohen, Aner Sela
Publication Date: March 2005
Keyword(s): auctions, contests
JEL(s): D44
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4951

We study asymmetric all-pay auctions with multiple objects where players? values for the objects are common knowledge. The players have different values for the objects but they have the same ranking. The contest designer may award one prize including all the objects to the player with the highest bid, or, alternatively, they may allocate several prizes, each prize including one object such that the first prize is awarded to the player with the highest bid, the second prize to the player with the second-highest bid, and so on until all the objects are allocated. We analyse the distribution of effort in one-prize and multiple-prize contests and show that allocation of several prizes may be optimal for a contest designer who maximizes the total effort.