| Warburger Str. 100, room: Q4.245
On June 19, 2017 Dr. Jörg Frank (TU Dortmund) will give a talk about "Optimal Favoritism in All-Pay Auctions and Lottery Contests" in the context of the SFB 901.
We analyze the revenue-enhancing potential of favoring specific contestants in complete information all-pay auctions and lottery contests with several heterogeneous contestants. Two instruments of favoritism are considered: Head starts that are added to the bids of specific contestants and multiplicative biases that give idiosyncratic weights to the bids. In the all-pay auction, head starts are more effective than biases while optimally combining both instruments even yields first-best revenue. In the lottery contest, head starts are less effective than biases and combining both instruments cannot further increase revenue. As all-pay auctions revenue-dominate lottery contests under optimal biases, we thus obtain an unambiguous revenue-ranking of all six combinations of contest formats and instruments. Autoren: Jörg Franke (TU Dortmund), Wolfgang Leininger (TU Dortmund), Cédric Wasser (U Bonn)