Behavior in all-pay auctions with incomplete information

This paper analyzes the behavior of single-unit all-pay auctions within the independent private values environment in the laboratory. We study revenue, individual bidding behavior, and efficiency, in relation to theoretical benchmarks and to a similar study of winner-pay first-price sealed-bid auctions. We conclude that the all-pay auction yields significantly higher revenue than both the risk- neutral Bayesian equilibrium and the winner-pay auction. Bidders' decisions move closer to equilibrium levels over time in the auction.