Bid caps in large contests

Wojciech Olszewski, Ron Siegel

Research output: Contribution to journalArticlepeer-review

15 Scopus citations


We study the effect of rigid and flexible bid caps on contestants’ aggregate costs and aggregate bids in all-pay contests with a large number of heterogeneous contestants and prizes. We show that rigid caps always decrease aggregate costs, whereas flexible caps have essentially no effect on aggregate costs. Rigid caps decrease aggregate bids when costs are linear or concave, but increase aggregate bids under some conditions when costs are convex. Flexible caps always decrease aggregate bids.

Original languageEnglish (US)
Pages (from-to)101-112
Number of pages12
JournalGames and Economic Behavior
StatePublished - May 2019

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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