Yarışma ile motivasyon

All-pay auctions have received considerable attention since they provide insight about wide range of competitions where effort is costly regardless of winning or losing. Unlike other types of auction, auctioneer could benefit from these sunk costs depending on his objective. The problem of maximizing total expected effort in all-pay auctions has been studied to manage the sunk costs favoring the designer. However, current literature lacks identifying dependence of prize valuation in ones effort in these games. This dependence is interesting to analyze for two reasons. First, from the designer's perspective, conditioning the prize on the effort could be profitable. Second, the equilibrium characteristics of such a game could be helpful in understanding bidding behavior by identifying the relation between the perception of the prize and their efforts. The result of our analysis show that the equilibrium characteristics significantly differ from the current literature where the prize is predetermined. Moreover, in motivating higher total effort, our model achieves higher designer surplus. Therefore, endogenous prize model could be a valuable tool in experimental studies for understanding players' valuation of their action. Moreover, conditioning prize on the total effort can be beneficial for a designer interested in maximizing the total effort.