All-pay auctions with discrete action spaces

Abstract

This article describes all-pay auctions with discrete action spaces and shows that pure-strategy Nash equilibria may exist. Such equilibria are shown to be potentially more favourable to both buyers and sellers than the more standard mixed-strategy equilibria, thus suggesting that it can be in the interest of both sides to limit bidders' action spaces.

Notes

¹Amegashie (2001) does present a stylized version of the all-pay auction in which pure-strategy equilibria may exist, but requires specific assumptions on payoff structure.