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.


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