Social Sciences
4 years ago

New auction model ensures highest bidder always wins, boosting seller revenue.

Mathematical Social Sciences
A model of a two-stage all-pay auction
Daisuke Hirata

Paper Summary

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The article presents a model of a two-stage all-pay auction, which is a type of competition where participants make irreversible investments. The researchers found that in this model, the highest value bidder always wins and the seller's revenue is equal to the second highest value among the bidders. This means that the seller doesn't need to know the bidders' values to run the auction successfully. The results apply to auctions with any number of bidders and stages.