Behavior in All-Pay Auctions with Ties

Alan Gelder (), Dan Kovenock and Roman Sheremeta ()
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Alan Gelder: Economic Science Institute, Chapman University

Working Papers from Chapman University, Economic Science Institute

Abstract: Despite the wide occurrence of ties in a variety of contest settings, the strategic interaction that arises when ties are treated as viable outcomes has received little attention. Building on recent theoretical work, we experimentally examine an extension of the canonical two-player all-pay auction in which a tie occurs unless one player’s bid exceeds the other’s by some critical threshold. In the event of a tie, each player receives an identical fraction of the prize. For the case where players receive one-half of the prize when they tie, we find that players’ expenditures are non-monotonic in the threshold required for victory. Moreover, for certain positive thresholds, expenditures may even be higher than under the standard all-pay auction. We also find that decreasing the fraction of the prize players receive for tying may either increase or decrease total expenditures. In accordance with theory, the effect depends upon the threshold.

Keywords: All-pay auction; contest; tie; draw; bid differential; experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 D44 D72 D74 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Working Paper: Behavior in All-Pay Auctions with Ties (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:15-22

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