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The value of information in asymmetric all-pay auctions |
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| Affiliation: | 1. Google Research, 111 8th Avenue, New York, NY 10011, United States;2. Computer Science Department, Cornell University, Ithaca, NY 14853, United States;1. Kellogg School of Management, Northwestern University, 2001 Sheridan Rd., Evanston, IL 60208, United States;2. Department of Economics, University of Illinois, 1407 W. Gregory Dr., Urbana, IL 61801-3606, United States;3. Department of Finance, London School of Economics, Houghton St., London WC2A 2AE, United Kingdom |
| Abstract: | This note analyzes a two-player all-pay auction with incomplete information. More precisely, one bidder is uncertain about the size of the initial advantage of his rival modeled as a head start in the auction.I derive the unique Bayesian Nash equilibrium outcome for a large class of cumulative distribution functions of the head start. The stronger player generates an informational rent if and only if his head start distribution is not stochastically dominated by a uniform distribution. I identify why my results for an uncertain head start differ qualitatively from uncertainty about a cost function or a valuation. |
| Keywords: | All-pay contests Head start Asymmetric information |
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