Upsets in all-pay auctions: an experiment

Last registered on September 24, 2024

Pre-Trial

Trial Information

General Information

Title
Upsets in all-pay auctions: an experiment
RCT ID
AEARCTR-0014374
Initial registration date
September 17, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 24, 2024, 2:46 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation

Other Primary Investigator(s)

PI Affiliation

Additional Trial Information

Status
In development
Start date
2024-09-20
End date
2024-11-30
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We regularly observe a perceived favorite losing out to an unlikely underdog in competitions. We can think of such an upset in terms of an all-pay auction model where a player with a high payoff relevant signal losing to a player with a lower signal. There exist a unique equilibrium in an all-pay auction model with arbitrarily correlated signals and interdependent valuations. The equilibrium is weakly monotone, in which the strong set order orders the bids, and yet, a player with a low signal can under certain correlation structures cause an upset by outbidding a high signal player. The aim of this project is to study this issue by way of an economic experiment.
External Link(s)

Registration Citation

Citation
Andersson, Ola and Henk Schouten. 2024. "Upsets in all-pay auctions: an experiment." AEA RCT Registry. September 24. https://doi.org/10.1257/rct.14374-1.0
Experimental Details

Interventions

Intervention(s)
We change the correlation of reward sizes within a bidding group to induce differences in bidding behavior and the occurrence of upsets (weakest bidder winning).
Intervention Start Date
2024-10-01
Intervention End Date
2024-11-30

Primary Outcomes

Primary Outcomes (end points)
Bids, upsets(weakest bidder winning the auction), profits
Primary Outcomes (explanation)
We construct a dummy variable taking the value 1 given that values in the pair were different and the lower value bidder won the auction. It takes the value 0 if the higher value bidder won the auction. It will be missing if both bidders had the same value.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Between treatment, we vary the correlation of valuations in an all-pay auction. The correlation of values in a bidding group can be either negative, independent, or positive. For a given correlation we study bidding and upsets (weakest bidder winning).
Experimental Design Details
Not available
Randomization Method
randomization done at session level by experimenters (not authors)
Randomization Unit
Treatment is randomized at the session level (each session consist of 24 subjects). We run three different treatments over 3 sessions each. The experiment is run externally by a lab in Vienna. They randomly select which treatment to run on each occasion.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
36 matching groups (12 in each treatment)
Sample size: planned number of observations
3*72
Sample size (or number of clusters) by treatment arms
72 in each treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
VCEE Ethics Committee
IRB Approval Date
2024-08-28
IRB Approval Number
2024_009
Analysis Plan

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