Disclosure Policies in All-pay Auctions with Bid Caps and Stochastic Entry

Abstract

This paper contributes to the literature that examines the effects of disclosing the actual number of bidders in contests with stochastic entry by considering resource constraint. We study an all-pay auction with complete information. The auction entails one prize and $n$ potential bidders. Each potential bidder has an exogenous probability of participation and faces an exogenous bid cap. It is shown that the contest organizer prefers fully concealing the information about the number of participating bidders. We extend the result to a case with endogenous entry.