Download This PaperExclusion in All‐Pay Auctions: An Experimental Investigation
14 Pages Posted: 5 Jun 2018
Date Written: Summer 2018
Abstract
Contest designers and managers who wish to maximize the overall revenue of a contest are frequently concerned with a trade‐off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the strongest bidder in order to promote greater homogeneity among the remaining bidders, even though the theoretical exclusion principle predicts otherwise. This is because the strongest bidders are willing to give up a substantial portion of their expected rent in order to minimize the chance of losing the contest.
Suggested Citation: Suggested Citation
Fehr, Dietmar and Schmid, Julia, Exclusion in All‐Pay Auctions: An Experimental Investigation (Summer 2018). Journal of Economics & Management Strategy, Vol. 27, Issue 2, pp. 326-339, 2018, Available at SSRN: https://ssrn.com/abstract=3189125 or http://dx.doi.org/10.1111/jems.12243
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