All-Pay Auction

AAA

DEFINITION of 'All-Pay Auction'

An economic and game theory concept in which participants place silent bids on a particular item. Unlike a standard auction, all-pay auction has everybody pay for their bid, regardless of whether they win the item being sold. Of course, in a standard auction, the highest bid wins the item.



INVESTOPEDIA EXPLAINS 'All-Pay Auction'

An example of an all-pay auction is a Tullock auction, which is sometimes referred to as a Tullock lottery. Rather than being just another form of commerce, the Tullock auction and other all-pay auctions are largely intellectual pursuits, used to describe economic behaviors.

For example, in a standard auction, a seller might expect to receive fair value for the goods he or she is offering. However, in an all-play auction, overbidding is common and the seller might expect to get better-than-fair value.



RELATED TERMS
  1. Dealer Market

    A financial market mechanism wherein multiple dealers post prices ...
  2. Smart Market

    A type of auction in which transactions are made to and from ...
  3. Reverse Auction

    A type of auction in which sellers bid for the prices at which ...
  4. Primary Market

    A market that issues new securities on an exchange. Companies, ...
  5. Secondary Market

    A market where investors purchase securities or assets from other ...
  6. Dutch Auction

    1. A public offering auction structure in which the price of ...
Related Articles
  1. Bonds & Fixed Income

    What determines the price of a bond ...

  2. Bonds & Fixed Income

    What determines the price of a bond ...

  3. Economics

    Where is cost of living lowest in the ...

  4. What is Bitcoin's fair market value?
    Investing Basics

    The Easy Way To Measure Bitcoin's Fair ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center