Abstract

In all-pay auctions with affiliated types, the implications of being of a higher type can be complex. Having a high assessment of the value of the prize is good news, but only if the other participants in the contest are not too likely also to have high assessments. If anticipated competition is strong, it is not clear whether a high or low bid will be a best response. In a laboratory experiment, we study behavior in both private-values and common-values settings with two contestants. We find general support for the comparative statics of Bayes-Nash equilibrium for private values. In contrast, behavior in common values settings in which bidders have very noisy information about the value of the prize differs greatly from the equilibrium predictions.