Abstract
We study all-pay auctions under incomplete information in which contestants have non-linear effort functions. The designer offers the option of insurance for which a contestant pays a premium to the contest designer. If a contestant does not win he is reimbursed the cost of his effort. We demonstrate that contests with insurance may be profitable for a designer who wishes to maximize his expected revenue as based on the contestants’ expected total effort, the premium of the insured contestants, and their reimbursement.
Original language | English |
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Pages (from-to) | 1-22 |
Number of pages | 22 |
Journal | Review of Economic Design |
Volume | 24 |
Issue number | 1-2 |
DOIs | |
State | Published - 1 Jun 2020 |
Keywords
- All-pay auctions
- Contests
- Insurance
- Reimbursement
ASJC Scopus subject areas
- Economics, Econometrics and Finance (all)