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

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

  2. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  3. How Fannie Mae And Freddie Mac Were ...
    Economics

    How Fannie Mae And Freddie Mac Were ...

  4. The Economics Of Labor Mobility
    Economics

    The Economics Of Labor Mobility

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center