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Exclusion in the all-pay auction: an experimental investigation
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Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract 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 ... view more
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. (author's abstract)... view less
Keywords
experiment; competition; heterogeneity; auction
Classification
National Economy
Document language
English
Publication Year
2014
City
Berlin
Page/Pages
30 p.
Series
Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Verhalten auf Märkten, SP II 2014-206
Handle
https://hdl.handle.net/10419/101452
Status
Published Version; reviewed
Licence
Deposit Licence - No Redistribution, No Modifications