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All pay auctions and group size: Grading on a curve and other applications

Listed author(s):
  • Andreoni, James
  • Brownback, Andy
Registered author(s):

    We model contests with a fixed proportion of prizes, such as a grading curve, as all-pay auctions where higher effort weakly increases the likelihood of a prize. We find theoretical predictions for the heterogeneous effect auction size has on effort from high- and low-types. We test our predictions in a laboratory experiment that compares behavior in two-bidder, one-prize auctions with behavior in 20-bidder, 10-prize auctions. We find a statistically significant 11.8% increase in aggregate bidding when moving from the small to large auction. The impact is heterogeneous: as the auction size increases, low-types decrease effort but high-types increase effort. Additionally, the larger auction provides a stronger rank-correlation between effort and ability, awarding more prizes to the higher-skilled and improving the efficiency of prize allocation.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0167268117300835
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    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 137 (2017)
    Issue (Month): C ()
    Pages: 361-373

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    Handle: RePEc:eee:jeborg:v:137:y:2017:i:c:p:361-373
    DOI: 10.1016/j.jebo.2017.03.017
    Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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