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An experimental investigation of overdissipation in the all pay auction

Volodymyr Lugovskyy (), Daniela Puzzello () and Steven Tucker ()

European Economic Review, 2010, vol. 54, issue 8, 974-997

Abstract: Pervasive overbidding represents a well-documented feature of all-pay auctions. Aggregate bids exceed Nash predictions in laboratory experiments, and individuals often submit bids that guarantee negative profits. This paper examines three factors that may reduce pervasive overbidding: (a) repetition (experience), (b) reputation (strangers vs. partners), and (c) active participation. Reputation and repetition reduce aggregate overdissipation, but they eliminate it only in conjunction with active participation.

Keywords: All-pay; auction; Experimental; economics; Collusion; Rent-seeking; model (search for similar items in EconPapers)
Date: 2010
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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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