Bidding Wars Intensify as All-Pay Auctions Reshape Competitive Landscapes
The article explores auctions where bidders have related values for the item being sold and use binary signals. High signals mean fierce competition, leading to unique equilibria and no profits for contestants. All-pay auctions result in low bidder profits but can outperform standard auctions in revenue with two bidders. However, with many bidders, standard auctions may generate more revenue and inefficient outcomes persist.