Mixed-strategy play in single-stage first-price all-pay auctions with symmetric players

Abstract

We consider sealed-bid, first-price, all-pay auctions with complete information, discrete strategy space, budget constraint, and symmetric players, and then construct the equilibrium solution in mixed strategies for both fixed and variable prizes. The equilibrium solution yields predictions concerning the effects of group size and value of the prize that are tested experimentally. The experimental results support equilibrium play on the aggregate but not individual level. Adaptive learning on the individual level accounts for the major trends in the aggregate expenditures over time.