Discussion paper

DP7874 Caps in Sequential Contests

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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Citation

Sela, A and R Megidish (eds) (2010), “DP7874 Caps in Sequential Contests”, CEPR Press Discussion Paper No. 7874. https://cepr.org/publications/dp7874