Bid caps in large contests

Wojciech Olszewski, Ron Siegel*

*Corresponding author for this work

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

We study the effect of rigid and flexible bid caps on contestants’ aggregate costs and aggregate bids in all-pay contests with a large number of heterogeneous contestants and prizes. We show that rigid caps always decrease aggregate costs, whereas flexible caps have essentially no effect on aggregate costs. Rigid caps decrease aggregate bids when costs are linear or concave, but increase aggregate bids under some conditions when costs are convex. Flexible caps always decrease aggregate bids.

Original languageEnglish (US)
Pages (from-to)101-112
Number of pages12
JournalGames and Economic Behavior
Volume115
DOIs
StatePublished - May 1 2019

Keywords

  • All-pay auctions
  • Bid caps
  • Contests
  • Large contests

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Bid caps in large contests'. Together they form a unique fingerprint.

  • Cite this