Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
All pay auctions are used in economics because they capture the essential elements of contests in which the player putting the greatest effort wins the prize and the other competitors go unrewarded. In this paper, the effects of uncertain supply in discriminatory all pay auctions are analyzed. This can be applied to model rent seeking activities like the lobbying process, technological competition and R&D and patent races and other situations like job promotion. Laboratory experiments are implemented for four different treatments and data is analyzed in terms of efficiency, bidding behavior and seller?s revenue. The data shows that overbidding is prominent in most treatments. When supply is uncertain, the seller?s average revenue is in line with the predicted level. It is observed that in some cases being in supply certainty configuration generates higher revenue to the seller.

Keywords: all pay auctions, supply uncertainty, discriminatory auctions, experimental economics.

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