Bayesian Nash equilibrium in all-pay auctions with interdependent types (Q6584595)

In this paper, the author prove the existence of a behavioral-strategy Bayesian Nash equilibrium in all-pay auctions with interdependent signals. The author initially assume a specific tie-breaking rule that, at any type profile, deterministically awards the object to one of the top bidders at that profile that has the highest value. It is then relatively straightforward to check that this auction satisfies the two conditions of the main equilibrium existence result in [\textit{O. Carbonell-Nicolau} and \textit{R. P. Mclean}, Math. Oper. Res. 43, No. 1, 100--129 (2018; Zbl 1445.91007)], uniform payoff security and aggregate-payoff upper semi-continuity. An equilibrium under that particular tie-breaking rule can therefore be found. It is shown that for any tie-breaking rule in an all-pay auction, any equilibrium puts zero ex-ante probability on bid profiles with ties at the highest bid, and that all unilateral strategic improvements can be done almost as profitably by avoiding such ties.\N\NSection 5 discusses some extensions that mix auctions and contests.