Lugovskyy, Volodymyr Puzzello, Daniela Tucker, Steven
Abstract
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.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
8604.
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Find related papers by JEL classification: C9 - Mathematical and Quantitative Methods - - Design of Experiments D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
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