Asymmetric all-pay auctions with incomplete information: The two-player case

We prove existence and uniqueness of (Bayesian) equilibrium for a class of generally asymmetric all-pay auctions with incomplete information. Due to its importance in applications some prominence is given to the first-price all-pay auction, for which a detailed characterization of equilibrium and an approximation to equilibrium of its well-studied complete information version are supplied. Furthermore, we relate our uniqueness result to the well-known multiplicity of equilibria in the ''war of attrition'' (second-price all-pay auction), which emerges as a ''limit'' point of the class of two-player auction games considered. (C) 1996 Academic Press, Inc.