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Three all-pay auction models are examined. The first is a symmetric two-player binary-signal all-pay auction with correlated signals and interdependent valuations. The first chapter provides a complete characterization of each form of equilibrium and gives conditions for their existence. The main finding is that there generically exists a unique equilibrium. The unique equilibrium can only be one of four forms of equilibria. I apply my all-pay auction model to elections, where a candidate that receives good news from the polls behaves in a rationally overconfident manner and reduces her equilibrium effort. Consequently, the other candidate can win the election in an upset. The second chapter extends Chapter 1's model to N signals. In comparison, the binary model allows for a guess-verify approach. However, the number of possible guesses increases rapidly when N increases. Hence such an approach is infeasible. Chapter 2's approach is centered around linear algebra techniques and a novel notion of a weakly monotone equilibrium. In a weakly monotone equilibrium the bid supports are ordered by the strong set order but not necessarily separated like the traditional monotone equilibrium. I classify these weakly monotone equilibria into four primary forms. I characterize each form and find sufficient conditions for their existence. Furthermore, for the model used in Rentschler and Turocy (2016), I provide a novel necessary and sufficient condition for the existence of a traditional monotone equilibrium. The third chapter considers a two-stage game: a negotiation stage followed by a conflict stage in case the negotiations break down. In a setting with multi-dimensional correlated types, two players compete over a good that is of uncertain but common value. Conflict is modeled as an all-pay auction, which endogenizes the cost of conflict. In the literature, which assumes independent private values or costs, a peaceful equilibrium, in which war occurs with zero probability need not exist. I find that in my correlated pure ...

"Befinden sich Firmen im Wettkampf in 'All-Pay' Auktionen unter vollständiger
Information, so bringen stille Beteiligungen asymmetrische externe Effekte in
den gesamten Auktionsrahmen. Hält die stärkste Firma einen großen Anteil an
Aktien der zweitstärksten Firma, kann dies die stärkere Firma von weiteren
Geboten abhalten. Als Folge vergrößern sich die Profite beider Firmen, sind
jedoch weniger effizient verteilt. Das umgekehrte Eigentumsverhältnis hebt
voraussichtlich die Gewinne der beteiligten Firmen an, jedoch ohne negative
Effizienzauswirkungen." (Autorenreferat)

If firms compete in all-pay auctions with complete information, silent shareholdings introduce asymmetric externalities into the allpay auction framework. If the strongest firm owns a large share in the second strongest firm, this may make the strongest firm abstain from bidding. As a consequence, equilibrium profits of both firms may increase, but the prize may be allocated less efficiently. The reverse ownership structure is also likely to increase the profits of the firms involved in the ownership relationship but without these negative efficiency effects.

Contest designers or managers who want to maximize the overall revenue of a contest (relative performance scheme) are frequently concerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders are willing to give up a substantial part of their expected rent and prefer a strategy that ensures a lower but secure pay-off.

In a (first price) all-pay auction, bidders simultaneously submit bids for an item. All players forfeit their bids, and the high bidder receives the item. This auction is widely used in economics to model rent seeking, R&D races, political contests, and job promotion tournaments. We fully characterize equilibrium for this class of games, and show that the set of equilibria is much larger than has been recognized in the literature. When there are more than two players, for instance, we show that even when the auction is symmetric there exists a continuum of asymmetric equilibria. Moreover, for economically important configurations of valuations, there is no revenue equivalence across the equilibria; asymmetric equilibria imply higher expected revenues than the symmetric equilibrium.

We study asymmetric all-pay auctions with multiple objects where players' values for the objects are common knowledge. The players have different values for the objects but they have the same ranking. The contest designer may award one-prize including all the objects to the player with the highest effort, or, alternatively, he may allocate several prizes, each prize including one object such that the first prize is awarded to the player with the highest effort, the second prize to the player with the second-highest effort, and so on until all the objects are allocated. We analyze the distribution of effort in one-prize and multiple-prize contests and show that allocation of several prizes may be optimal for a contest designer who maximizes the total effort. [Copyright 2008 Elsevier B.V.]

Contest or auction designers who want to maximize the overall revenue are frequently concerned with a trade-off between contest homogeneity and inclusion of bidders with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders considerably overexert. A possible explanation is that these bidders are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a lower but secure pay-off. (author's abstract)