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

Llorente-Saguer, Aniol; Sheremeta, Roman M.; Szech, Nora

Bibtex export

@book{ Llorente-Saguer2016,
 title = {Designing contests between heterogeneous contestants: an experimental study of tie-breaks and bid-caps in all-pay auctions},
 author = {Llorente-Saguer, Aniol and Sheremeta, Roman M. and Szech, Nora},
 year = {2016},
 series = {Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Ökonomik des Wandels},
 pages = {32},
 volume = {SP II 2016-307},
 address = {Berlin},
 publisher = {Wissenschaftszentrum Berlin für Sozialforschung gGmbH},
 abstract = {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.},
 keywords = {Auktion; auction; Teilnehmer; participant; Wettkampf; match; Motivation; motivation; Verhalten; behavior; Spieltheorie; game theory}}