Arbeitspapier

Designing contests between heterogeneous contestants: An experimental study of tie-breaks and bid-caps in all-pay auctions

A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the "discouragement effect." Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the discouragement effect and increase the designer's revenue. We test these predictions in an experiment. Our data show that indeed, strengthening weaker contestants through tie-breaks and bid-caps significantly diminishes the discouragement effect. Bid-caps can also improve revenue. Most deviations from Nash equilibrium can be explained by the level-k model of reasoning.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 796

Klassifikation
Wirtschaft
Noncooperative Games
Design of Experiments: Laboratory, Individual
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Thema
All-pay auction
Rent-seeking
Bid-caps
Tie-breaks
Contest design

Ereignis
Geistige Schöpfung
(wer)
Llorente-Saguer, Aniol
Sheremeta, Roman M.
Szech, Nora
Ereignis
Veröffentlichung
(wer)
Queen Mary University of London, School of Economics and Finance
(wo)
London
(wann)
2016

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Llorente-Saguer, Aniol
  • Sheremeta, Roman M.
  • Szech, Nora
  • Queen Mary University of London, School of Economics and Finance

Entstanden

  • 2016

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