All-Pay Auctions with Different Forfeits

Document pages: 9 pages

Abstract: In an auction each party bids a certain amount and the one which bids thehighest is the winner. Interestingly, auctions can also be used as models forother real-world systems. In an all pay auction all parties must pay a forfeitfor bidding. In the most commonly studied all pay auction, parties forfeittheir entire bid, and this has been considered as a model for expenditure onpolitical campaigns. Here we consider a number of alternative forfeits whichmight be used as models for different real-world competitions, such aspreparing bids for defense or infrastructure contracts.