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A note on the Exclusion Principle

By Paolo Bertoletti


According to the so-called Exclusion Principle (introduced by Baye et alii, 1993), it might be profitable for the seller to reduce the number of fully-informed potential bidders in an all-pay auction. We show that it does not apply if the seller regards the bidders’ private valuations as belonging to the class of identical and independent distributions with a monotonic hazard rate.

Topics: D82 - Asymmetric and Private Information; Mechanism Design, D44 - Auctions, D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Year: 2006
DOI identifier: 10.1016/j.jmateco.2008.02.001
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