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Caps on Bidding in All-Pay Auctions: Comments on the Experiments of A. Rapoport and W. Amaldoss

Author

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  • Dechenaux, Emmanuel
  • Kovenock, Dan
  • Lugovskyy, Volodymry

Abstract

In an article published in this journal, Rapoport and Amaldoss (2000, Journal of Economic Behavior and Organization, 42, 483-521) analyze symmetric and asymmetric investment games similar to two-player all-pay auctions with bid caps. In this note, we correct an error in their characterization of the set of Nash Equilibria of their symmetric investment game. In particular, we find Equilibria that Rapoport and Amaldoss (2000) fail to identify. Taking these Equilibria into account has important implications for the analysis of data from Rapoport and Amaldoss’s experiments.

Suggested Citation

  • Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymry, 2003. "Caps on Bidding in All-Pay Auctions: Comments on the Experiments of A. Rapoport and W. Amaldoss," Purdue University Economics Working Papers 1161, Purdue University, Department of Economics.
  • Handle: RePEc:pur:prukra:1161
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    References listed on IDEAS

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    1. Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymyr, 2006. "Caps on bidding in all-pay auctions: Comments on the experiments of A. Rapoport and W. Amaldoss," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 276-283, October.
    2. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 291-305.
    3. Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymry, 2003. "A Comment on “David and Goliath: An Analysis on Asymmetric Mixed-Strategy Games and Experimental Evidence”," Purdue University Economics Working Papers 1162, Purdue University, Department of Economics.
    4. Rapoport, Amnon & Amaldoss, Wilfred, 2004. "Mixed-strategy play in single-stage first-price all-pay auctions with symmetric players," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 585-607, August.
    5. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-651, June.
    6. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when R > 2: Mixed Strategy Equilibria and Mean Dissipation Rates," Papers 10-93-9, Pennsylvania State - Department of Economics.
    7. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when R > 2: Mixed Strategy Equilibria and Mean Dissipation Rates," Papers 10-93-9, Pennsylvania State - Department of Economics.
    8. Rapoport, Amnon & Amaldoss, Wilfred, 2000. "Mixed strategies and iterative elimination of strongly dominated strategies: an experimental investigation of states of knowledge," Journal of Economic Behavior & Organization, Elsevier, vol. 42(4), pages 483-521, August.
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    Cited by:

    1. Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymyr, 2006. "Caps on bidding in all-pay auctions: Comments on the experiments of A. Rapoport and W. Amaldoss," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 276-283, October.
    2. Rapoport, Amnon & Amaldoss, Wilfred, 2008. "In search of experimental support for an asymmetric equilibria solution in symmetric investment games," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 200-203, July.
    3. HHironori Otsubo, 2012. "Contests with Incumbency Advantages: An Experiment Investigation of the Effect of Limits on Spending Behavior and Outcome," Jena Economic Research Papers 2012-020, Friedrich-Schiller-University Jena.
    4. Han Feng & David Hobson, 2015. "Gambling in contests modelled with diffusions," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 38(1), pages 21-37, April.
    5. Miguel A. Fonseca & Hans-Theo Normann, 2013. "Excess Capacity and Pricing in Bertrand-Edgeworth Markets: Experimental Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(2), pages 199-228, June.
    6. Roman M. Sheremeta, 2011. "Contest Design: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 573-590, April.
    7. Llorente-Saguer, Aniol & Sheremeta, Roman M. & Szech, Nora, 2016. "Designing contests between heterogeneous contestants: An experimental study of tie-breaks and bid-caps in all-pay auctions," Working Paper Series in Economics 88, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    8. Lang, Matthias & Seel, Christian & Strack, Philipp, 2014. "Deadlines in stochastic contests," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 134-142.
    9. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.
    10. Chen Cohen & Ofer Levi & Aner Sela, 2017. "All-Pay Auctions With Asymmetric Effort Constraints," Working Papers 1706, Ben-Gurion University of the Negev, Department of Economics.
    11. Konrad, Kai A., 2007. "Strategy in contests: an introduction
      [Strategie in Turnieren – eine Einführung]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
    12. Dechenaux, Emmanuel & Kovenock, Dan & Lugovskyy, Volodymry, 2003. "A Comment on “David and Goliath: An Analysis on Asymmetric Mixed-Strategy Games and Experimental Evidence”," Purdue University Economics Working Papers 1162, Purdue University, Department of Economics.
    13. Ivan Pastine & Tuvana Pastine, 2012. "All-pay contests with constraints," Working Papers 201204, School of Economics, University College Dublin.
    14. Hironori Otsubo, 2015. "Nash Equilibria in a Two-Person Discrete All-Pay Auction with Unfair Tie-Break and Complete Information," Economics Bulletin, AccessEcon, vol. 35(4), pages 245-245.

    More about this item

    Keywords

    All-Pay Auction ; Mixed strategies ; Discrete strategy space ; Bid caps ; Experiments;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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