An experimental investigation of overdissipation in the all pay auction
Volodymyr Lugovskyy (),
Daniela Puzzello () and
Steven Tucker ()
MPRA Paper from University Library of Munich, Germany
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. We find that aggregate over-dissipation diminishes but is not eliminated with repetition, and that repetition, in conjunction with active participation generates bids consistent with the static Nash predictions.
JEL-codes: C9 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-gth
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Journal Article: An experimental investigation of overdissipation in the all pay auction (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8604
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