Abstract

We examine the effect of publicly disclosing or concealing bidders' types in an all-pay auction with a common bid cap. We call partial (full) disclosure policy the setup where the contest designer's disclosure policy is (not) contingent on type realization. Despite a bid cap possibly increasing the expected expenditures under a partial disclosure policy and the expected expenditures of low-types under a policy of full disclosure, the bid cap unambiguously decreases the expected total expenditures, regardless of the disclosure policy. For any given bid cap and allowing for full and partial disclosure policies, we find that expenditures are minimized with the policy in which a designer discloses bidders' types only if both players have a low valuation of the prize. The expenditures are maximized with the full concealment policy or with the policy in which a designer discloses the information only if both players have a high valuation. All in all, when the designer can choose both the disclosure policy and the bid cap, revenue is maximized employing full concealment with no bid cap.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.