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. Dutch Auction

    1. A public offering auction structure in which the price of ...
  5. Secondary Market

    A market where investors purchase securities or assets from other ...
  6. Primary Market

    A market that issues new securities on an exchange. Companies, ...
Related Articles
  1. Economics

    What is a roll-up merger and why does it occur?

    Find out what a roll-up merger is and how it is executed. See why roll-ups might bring added efficiency and competition into a fragmented market.
  2. Economics

    What are the differences between internal and external economies of scale?

    Take a deeper look at the differences between internal and external economies of scale, and learn why internal economies offer more competitive advantage.
  3. Economics

    How does marginal cost of production relate to economies of scale?

    See how marginal cost of production relates to economies of scale, and why every company should be concerned with reducing its marginal costs.
  4. Professionals

    How do companies measure labor supply in human resources planning?

    Find out how and why a company's human resources department would measure labor supply, and what policies would address a shortage or surplus.
  5. Economics

    What is a diseconomy of scale and how does this occur?

    Take a deeper look into diseconomies of scale, the economic phenomenon that can make companies less efficient as they become too large.
  6. Economics

    What is backward integration and how does it relate to economies of scale?

    See how a firm can realize greater economies of scale by engaging in backward integration mergers with one or more of its suppliers.
  7. Economics

    How do economies of scale work with globalization?

    Discover how globalization can lead to unprecedented economies of scale for firms across the world, leading to higher global efficiency and productivity.
  8. Fundamental Analysis

    How do economists and psychologists calculate diminishing marginal utility differently?

    Find out why disagreements about the validity of the law of diminishing marginal utility usually boil down to arguments about definitions.
  9. Investing Basics

    Are marginal costs fixed or variable costs?

    Understand how to identify marginal costs as a function of fixed and variable costs. This article addresses how marginal costs vary based on production changes.
  10. Economics

    Can Internet companies be vertically integrated?

    Find out how online businesses are beginning to take advantage of vertical integration for many of the same reasons as traditional businesses.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center