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Playing the field in all-pay auctions
Published online by Cambridge University Press: 14 March 2025
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.
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- Copyright © 2020 Economic Science Association
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.