Multi‐battle Contests: An Experimental Study

Shakun Mago and Roman Sheremeta

Southern Economic Journal, 2017, vol. 84, issue 2, 407-425

Abstract: We examine behavior of subjects in simultaneous and sequential multi‐battle contests, where each individual battle is modeled as an all‐pay auction with complete information. In simultaneous best‐of‐three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceed to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multidimensional iterative reasoning and a nonmonetary utility of winning.

Date: 2017
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Citations: View citations in EconPapers (13)

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https://doi.org/10.1002/soej.12182

Related works:
Working Paper: Multi-Battle Contests: An Experimental Study (2016)
Working Paper: Multi-Battle Contests: An Experimental Study (2016)
Working Paper: Multi-Battle Contests: An Experimental Study (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:84:y:2017:i:2:p:407-425

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