Work

Simultaneous versus sequential all-pay auctions: an experimental study

Year: 2016

Type: article

Abstract: While both simultaneous and sequential contests are mechanisms used in practice such as crowdsourcing, job interviews and sports contests, few studies have directly compared their performance. By modeling contests as incomplete information all-pay auctions with linear costs, we analytically and experimentally show that the expected maximum effort is higher in simultaneous contests, in which contestants choose their effort levels independently and simultaneously, than in sequential contests, in which late entrants make their effort choices after observing all prior participants’ choices. Our experimental results also show that efficiency is higher in simultaneous contests than in sequential ones. Sequential contests’ efficiency drops significantly as the number of contestants increases. We also discover that when participants’ ability follows a power distribution, high ability players facing multiple opponents in simultaneous contests tend to under-exert effort, compared to theoretical predictions. We explain this observation using a simple model of overconfidence.

Source: Experimental Economics

DOI: 10.1007/s10683-016-9504-1

Authors: Lian Jian, Zheng Li, Tracy Xiao Liu

Institutions: University of Southern California, Tsinghua University

Language: English

Topic: Auction Theory and Applications

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green