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An experimental study of bidding in contests of incomplete information

Published online by Cambridge University Press:  14 March 2025

Philip Brookins  and
Dmitry Ryvkin
Philip Brookins
Affiliation:
Department of Economics, Florida State University, 32306-2180 Tallahassee, FL, USA
Dmitry Ryvkin*
Affiliation:
Department of Economics, Florida State University, 32306-2180 Tallahassee, FL, USA
*
dryvkin@fsu.edu
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Abstract

In many contest situations, such as R&D competition and rent seeking, participants’ costs are private information. We report the results of an experimental study of bidding in contests under different information and symmetry conditions about players’ costs of effort. The theory predicts qualitatively different comparative statics between bids under complete and incomplete information in contests of two and more than two players. We use a 2×3 experimental design, (n=2, n=4)×(symmetric complete information, asymmetric complete information, incomplete information), to test the theoretical predictions. We find the comparative statics of bids across the information and symmetry conditions, and the qualitative differences in comparative statics across group sizes, in partial agreement with the theory.

Keywords

ContestIncomplete informationBiddingExperiment

JEL classification

C91: Laboratory, Individual Behavior D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior C72: Noncooperative Games D82: Asymmetric and Private Information • Mechanism Design
Type
Research Article
Information
Experimental Economics , Volume 17 , Issue 2 , June 2014 , pp. 245 - 261
Copyright
Copyright © 2013 Economic Science Association

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Footnotes

Electronic Supplementary Material The online version of this article (doi:https://doi.org/10.1007/s10683-013-9365-9) contains supplementary material, which is available to authorized users.

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