Bimodal Bidding in Experimental All-Pay Auctions

Christiane Ernst () and Christian Thöni

University of St. Gallen Department of Economics working paper series 2009 from Department of Economics, University of St. Gallen

Abstract: We report results from experimental first-price, sealed-bid, all-pay auctions for a good with a common and known value. We observe bidding strategies in groups of two and three bidders and under two extreme information conditions. As predicted by the Nash equilibrium, subjects use mixed strategies. In contrast to the prediction under standard assumptions bids are drawn from a bimodal distribution: very high and very low bids are much more frequent than intermediate bids. Standard risk preferences cannot account for our results. However, bidding behavior is consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory.

Keywords: All-pay Auction; Prospect Theory, Experiment (search for similar items in EconPapers)
JEL-codes: C91 D44 D72 D80 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-08
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://ux-tauri.unisg.ch/RePEc/usg/dp2009/DP-0925-Th.pdf (application/pdf)

Related works:
Journal Article: Bimodal Bidding in Experimental All-Pay Auctions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2009:2009-25

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