Valuation structure in incomplete information contests: experimental evidence Academic Article

journal

  • Public Choice

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.

publication date

  • 2019/6/1
  • 2018/6/22

edition

  • 179

keywords

  • contestants
  • expenditures
  • structures
  • valuation

International Standard Serial Number (ISSN)

  • 0048-5829

number of pages

  • 14

start page

  • 1
  • 195–208

end page

  • 14