Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/157372
Authors: 
Fehr, Dietmar
Schmid, Julia
Year of Publication: 
2017
Series/Report no.: 
WZB Discussion Paper SP II 2017-202
Abstract: 
Contest designers or managers who want to maximize the overall revenue of a contest (relative performance scheme) are frequently concerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able bidder in favor of greater homogeneity among the remaining bidders, even if the theoretical exclusion principle predicts otherwise. This is because the strongest bidders are willing to give up a substantial part of their expected rent and prefer a strategy that ensures a lower but secure pay-off.
Subjects: 
all-pay auction
contests
heterogeneity
superstars
experiments
JEL: 
C72
C92
D84
Document Type: 
Working Paper

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