All-pay auction
Host this auctionEach bidder submits a private offer. The highest offer wins the item, but every bidder pays what they offered, including those who lose.
Make a private bid
The ticket is worth $80 to you. Your offer is filled in below; you can change it before submitting.
Choosing whether to bid
The prize’s value alone is not enough to judge an offer. You also need to consider your chance of winning, because the payment is due either way. Offering the full value of the prize leaves no gain if you win and costs you that entire amount if you lose.
For the seller, collecting every bid does not guarantee a larger total. Buyers may make smaller offers, or decline to take part, because losing is costly too.
Fundraising
The rule has a different appeal when people want to support a cause as well as win a prize. Losing contributions still support the fundraiser. The amount raised is the sum of everyone’s final bids, so the losing bids can make up much of the total.
An all-pay fundraiser is different from a raffle. The highest contribution wins the prize. Making a smaller contribution does not buy a chance in a random draw.
Competition outside auctions
Economists also use all-pay auctions to study competition in which everyone spends resources but only one participant receives the reward. Companies racing to develop an invention, for example, pay for research even if a rival gets there first. Here the cost of competing is the money spent on research. Unlike an auction payment, it does not go to whoever awards the prize.
Host this auction
Make the payment rule clear before anyone bids. Bidders may replace an offer until closing and owe only their final accepted offer. Joining without bidding costs nothing.
The host receives the payment list, and each bidder sees their own amount owed. Payments are arranged outside this site. Canceling the auction voids all offers.