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Playing the field in all-pay auctions

Published online by Cambridge University Press:  14 March 2025

Daniel G. StephensonOpen the ORCID record for Daniel G. Stephenson[Opens in a new window] and
Alexander L. BrownOpen the ORCID record for Alexander L. Brown[Opens in a new window]
Daniel G. Stephenson*
Affiliation:
Department of Economics, Virginia Commonwealth University, Richmond, USA
Alexander L. Brown*
Affiliation:
Department of Economics, Texas A&M University, College Station, USA
*
stephensod@vcu.edu
alexbrown@tamu.edu
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Abstract

We provide the first examination of all-pay auctions using continuous-time protocols, allowing subjects to adjust their bid at will, observe payoffs almost instantaneously, and gain more experience through repeated-play than in previous, discrete-time, implementations. Unlike our predecessors—who generally find overbidding—we observe underbidding relative to Nash equilibrium. To test the predictions of evolutionary models, we vary the number of bidders and prizes across treatments. If two bidders compete for a single prize, evolutionary models predict convergence to equilibrium. If three bidders compete for two prizes, evolutionary models predict non-convergent cyclical behavior. Consistent with evolutionary predictions, we observe cyclical behavior in both auctions and greater instability in two-prize auctions. These results suggest that evolutionary models can provide practitioners in the field with additional information about long-run aggregate behavior that is absent from conventional models.

Keywords

All pay auctionsEvolutionary game theoryExperiment

JEL classification

D44: AuctionsC92: Laboratory, Group BehaviorC73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games

Information

Type
Original Paper
Information
Experimental Economics , Volume 24 , Issue 2 , June 2021, pp. 489 - 514
Copyright
Copyright © 2020 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-020-09669-5) contains supplementary material, which is available to authorized users.

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