Oct. 11, David Malueg, Ph.D.
 – The Best-Shot All-Pay (Group) Auction with Complete Information

David Malueg headshotAbstract
: We analyze an all-pay group contest problem in which individual members’ efforts are aggregated via the best-shot technology and the prize is a public good for the winning group. The interplay of within-group free-riding and across-group competition allows for a wide variety of equilibria, according to how well groups are able to overcome internal free-riding. In a symmetric model we derive equilibria in which multiple agents per group are active, in contrast with the existing literature. Our findings differ qualitatively from those of the individualistic all-pay auction: rents are not necessarily dissipated in equilibrium, total expected efforts vary across equilibria, and participation is expected to be greater. Moreover, equilibria with greater symmetry of behavior within a group are shown to have more ”wasted” effort but also greater payoffs as overall efforts are lower. In contrast to many results in the literature, free-riding can be beneficial for players as it reduces competition among groups. Examples of asymmetric group contests are also studied.

Professor Malueg currently is Professor of Economics at UC Riverside. Previously he taught at the University of Iowa and Tulane University. Between those two appointments he worked five years in the Antitrust Division of the U.S. Department of Justice. His research interests include microeconomics, game theory, industrial organization, and environmental economics. Current projects study the efficiency of private provision of public goods, changes in the European Union Emission Trading System to improve efficiency, and the consequences of strategic behavior in network industries. Professor Malueg’s recent research has been published in journals including Economic Theory, The Journal of Industrial Economics, The International Journal of Game Theory, The Journal of Environmental Economics and Management, and The Review of Economics and Statistics.

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