Valuation structure in incomplete information contests: experimental evidence

Diego Aycinena, Rimvydas Baltaduonis, Lucas Rentschler

Research output: Contribution to journalArticle

1 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)195–208
Number of pages14
JournalPublic Choice
Volume179
Issue number3-4
DOIs
StatePublished - Jun 1 2019

All Science Journal Classification (ASJC) codes

  • Sociology and Political Science
  • Economics and Econometrics

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