Games 2013, 4(4), 608-623; doi:10.3390/g4040608
Article

Bimodal Bidding in Experimental All-Pay Auctions

Received: 17 July 2013; in revised form: 19 September 2013 / Accepted: 19 September 2013 / Published: 11 October 2013
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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.
Keywords: all-pay auction; prospect theory; experiment
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MDPI and ACS Style

Ernst, C.; Thöni, C. Bimodal Bidding in Experimental All-Pay Auctions. Games 2013, 4, 608-623.

AMA Style

Ernst C, Thöni C. Bimodal Bidding in Experimental All-Pay Auctions. Games. 2013; 4(4):608-623.

Chicago/Turabian Style

Ernst, Christiane; Thöni, Christian. 2013. "Bimodal Bidding in Experimental All-Pay Auctions." Games 4, no. 4: 608-623.

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