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Bimodal Bidding in Experimental All-Pay Auctions

Alumna of the London School of Economics, London WC2A 2AE, UK
Walras Pareto Center, University of Lausanne, Lausanne-Dorigny CH-1015, Switzerland
Author to whom correspondence should be addressed.
Received: 17 July 2013 / Revised: 19 September 2013 / Accepted: 19 September 2013 / Published: 11 October 2013
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. View Full-Text
Keywords: all-pay auction; prospect theory; experiment 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, and Christian Thöni. 2013. "Bimodal Bidding in Experimental All-Pay Auctions" Games 4, no. 4: 608-623.

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