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Simultaneous versus sequential all-pay auctions: an experimental study

Published online by Cambridge University Press:  14 March 2025

Lian Jian*
Affiliation:
University of Southern California, Los Angeles, CA, USA
Zheng Li*
Affiliation:
Tsinghua University, Beijing, China
Tracy Xiao Liu*
Affiliation:
Tsinghua University, Beijing, China

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.

Type
Original Paper
Copyright
Copyright © 2016 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-016-9504-1) contains supplementary material, which is available to authorized users.

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