All-pay contests with unordered cost asymmetry: An experimental study

Abstract

This paper presents a laboratory experiment investigating contest design and contestant behavior in settings where participants have different cost functions and regions of advantage, a topic that is relatively unexplored. Utilizing lab experiments based on Siegel’s (2009, 2010) models, we discover that bidding strategies and payoffs largely follow theoretical predictions. The weakest contestants tend to over-participate due to their cost advantage in low-bid regions. Adding a prize or increasing the prize value benefits stronger participants and increases the designer’s revenue. While decreasing the number of contestants also favors stronger participants, the designer’s revenue decrease in response.