We conduct an experiment to uncover the reasons behind the typically large behavioral variation and low explanatory power of Nash equilibrium observed in Tullock contests. In our standard contest treatment, only 7% of choices are consistent with Nash equilibrium which is in line with the...

The Winner s Curse (WC) is a non-equilibrium behavior in common-value auctions involving systematic and persistent overbidding that often results in signi ficant losses. It is one of the most robust fi ndings in laboratory experiments. We developed an auction mechanism with a payment rule that...

We analyze first-price equilibrium bidding behavior of capacity-constrained firms in a sequence of two procurement auctions. In the model, firms with a cost advantage in completing the project auctioned off at the end of the sequence may enter the unfavored first auction hoping to lose it....

We introduce a new method of varying risk that bidders face in first-price and second-price private value auctions. We find that decreasing bidders’ risk in first-price auction reduces the degree of overbidding relative to the risk-neutral Bayesian Nash equilibrium prediction.This finding is...

We introduce a new method of varying the risk that bidders face in first-price private value auctions. We find that decreasing bidders’ risk significantly reduces the degree of overbidding relative to the risk-neutral Bayesian-Nash equilibrium prediction. This implies that risk affects bidding...

We examine the incentive effects of funding contracts on entrepreneurial effort decisions and allocative efficiency. We experiment with four types of contracts (standard debt contract, outside equity, non-monotonic contract, full-subsidy contract) that differ in the structure of investor...

We analyze first-price equilibrium bidding behavior of capacity-constrained firms in a sequence of two procurement auctions. In the model, firms with a cost advantage in completing the project auctioned off at the end of the sequence may enter the unfavored first auction hoping to lose it....

We examine the incentive effects of funding contracts on entrepreneurial effort decisions and allocative efficiency. We experiment with funding contracts that differ in the structure of investor repayment and, therefore, in the incentives for entrepreneurial effort provision. Theoretically the...

We introduce a new method of varying risk that bidders face in first-price and second-price private value auctions. We find that decreasing bidders’ risk in first-price auction reduces the degree of overbidding relative to the risk-neutral Bayesian Nash equilibrium prediction.This finding is...

We experimentally investigate if theoretically superior non-monotonic repayment contracts yield superior results in the laboratory. We find replacing standard debt contracts with repayment-equivalent non-monotonic contracts increases entrepreneurial income by 170% and total surplus by 30%.