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On optimal head starts in all-pay auctions

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Article
Author/s: 
Christian Seel and Cédric Wasser
Economics Letters
Issue number: 
2
Publisher: 
Elsevier
Year: 
2014
Journal pages: 
211–214
We consider a two-player all-pay auction with symmetric independent private values that are uniformly distributed. The designer chooses the size of a head start that is given to one of the players. The designer’s objective is to maximize a convex combination of the expected highest effort and the expected aggregate effort. Unless the weight on the highest effort is one, small head starts are always worse than no head start. Moreover, the optimal head start is strictly positive if and only if the weight on the highest effort is large enough.
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