Tu mihi soli places: An experiment on the competitiveness of all-pay auctions with private information

Economics

Speaker:Theodore Turocy, University of East Anglia
Date: Friday 29 January 2016
Time: 15.30
Location: Matrix Lecture Theatre, Building One

Further details

In all-pay auctions with affiliated types, the implications of being of a “higher” type can be complex. Having a high assessment of the value of the prize is good news, but only if the other participants in the contest are not too likely to believe the same. In a laboratory experiment, we study behavior in both private-values and common-values settings. We vary the degree of correlation between types. While bidding is consistently aggressive across treatments, we find general support of the comparative statics of Bayes-Nash equilibrium for private values. In constrast, behavior in common values settings in which bidders have very noisy information about the value of the prize differs greatly from the equilibrium predictions.