All-pay contest : an experimental investigation

Abstract

This paper experimentally investigates a special class of contests, “all-pay contests” (Siegel 2009), where economic agents are asymmetrically positioned and compete by making irreversible investments. We compare four treatments in a between-subject design, with a simple parameterization of Siegel’s all-pay contest model, to test the theoretical predictions. We find that, while the treatment effects are consistent with the theoretical prediction, average payoffs are significantly lower, and that Siegel's closed form formula is not fully sufficient to determine players’ equilibrium payoffs. Shape of the cost functions, players’ risk and social preferences, and the dynamic of the contest are the possible areas for further research.