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Bimodal bidding in experimental all-pay auctions

Ernst, Christiane and Thöni, Christian (2013) Bimodal bidding in experimental all-pay auctions. Games, 4 (4). pp. 608-623. ISSN 2073-4336

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Identification Number: 10.3390/g4040608

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. Bidding behavior is, however, consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory.

Item Type: Article
Official URL: http://www.mdpi.com/journal/games
Additional Information: © 2013 MDPI AG
Divisions: LSE
Subjects: H Social Sciences > HB Economic Theory
Q Science > QA Mathematics
Date Deposited: 21 Feb 2014 17:14
Last Modified: 26 Jan 2024 19:18
URI: http://eprints.lse.ac.uk/id/eprint/55816

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