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Valuation structure in incomplete information contests: experimental evidence

Author

Listed:
  • Diego Aycinena

    (Universidad del Rosario)

  • Rimvydas Baltaduonis

    (Gettysburg College)

  • Lucas Rentschler

    (Utah State University)

Abstract

We experimentally examine perfectly discriminating contests under three valuation structures: pure common-value, pure private-value and a case with both private and common value components. In line with the results from the previous literature, we find that, regardless of valuation structure, contestants often choose very conservative expenditures, and very aggressive expenditures. Average expenditures exceed Nash equilibrium predictions. In valuation structures with a common value component, contestants often choose expenditures in excess of the expected value of the prize conditional on winning the contest. That is, they often guarantee themselves negative payoffs in expectation.

Suggested Citation

  • Diego Aycinena & Rimvydas Baltaduonis & Lucas Rentschler, 2019. "Valuation structure in incomplete information contests: experimental evidence," Public Choice, Springer, vol. 179(3), pages 195-208, June.
  • Handle: RePEc:kap:pubcho:v:179:y:2019:i:3:d:10.1007_s11127-018-0568-7
    DOI: 10.1007/s11127-018-0568-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Contests; Experiments; Winner’s curse;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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