Exclusion in the all-pay auction: An experimental investigation

Arbeitspapier

Contest or auction designers who want to maximize the overall revenue are frequently concerned with a trade-off between contest homogeneity and inclusion of bidders with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders considerably overexert. A possible explanation is that these bidders are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a lower but secure pay-off.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2014-206

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Group Behavior ; Expectations; Speculations
• Subject: experiments ; contests ; all-pay auction ; heterogeneity ; regret aversion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fehr, Dietmar ; Schmid, Julia
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/101452
• Last update: 10.03.2025, 11:44 AM CET