All-pay auction

The all -pay auction is a special form of the auction. The bidder in this auction must here also pay all their bids ( all pay), regardless of which bidder is awarded the contract. There are two (three) basic forms: In the American auction and penny auction, the winner is determined after the end of the auction period. All bets are mostly the same height, winner is the last bidder, who must pay an additional amount at the penny auction one determined from the number of bids final price. In the other form give an indefinite number of tenderers or groups of tenderers hidden bids for an auctioneer from. After a period, bids are compared, the one bidder or that group of bidders with the highest (total ) Bid awarded the contract for the goods or of identical bids, the auction object is shared. This article deals with this second form.

Application

In practice, it does not come to an application of this auction model because it is perceived as unfair. However, it is on auction theory, a model that will be explained in large part the economic effects of lobbying, bribes and political contributions.

Tenderers are at the party donations donors, auction goods, the party or candidate win and the seller, so the receiver, the parties or the campaign manager behind it are. The bidder donate so that their candidate / win their party. According to the model then wins the party that has received more donations and used in the election campaign. However, all tenderers are independent of the election results to their donations poorer.

Applications as auction can be found at the Games Genre Play by email.