Optimal favoritism in all-pay auctions and lottery contests

B-Tier
Journal: European Economic Review
Year: 2018
Volume: 104
Issue: C
Pages: 22-37

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze the revenue-enhancing potential of favoring specific contestants in complete-information all-pay auctions and lottery contests with several heterogeneous contestants. Two instruments of favoritism are considered: head starts that are added to the bids of specific contestants and multiplicative biases that give idiosyncratic weights to the bids. In the all-pay auction, head starts are more effective than biases while optimally combining both instruments even yields first-best revenue. In the lottery contest, head starts are less effective than biases and combining both instruments cannot further increase revenue. As all-pay auctions revenue-dominate lottery contests under optimal biases, we thus obtain an unambiguous revenue-ranking of all six combinations of contest formats and instruments.

Technical Details

RePEc Handle
repec:eee:eecrev:v:104:y:2018:i:c:p:22-37
Journal Field
General
Author Count
3
Added to Database
2026-01-25