We consider a two-player all-pay auction with symmetric independent private values that are uniformly distributed. The designer chooses the size of a head start that is given to one of the players. The designer’s objective is to maximize a convex combination of the expected highest effort and...

The data reported in this paper show that in an ultimatum mini-game rejection rates of low offers are significantly reduced if participation for responders is voluntary but costly. A possible explanation based on cognitive dissonance and loss aversion is offered.

In this paper, we demonstrate that the existence of sequential equilibria may depend on the players holding beliefs which are tailored to the respective equilibrium but otherwise difficult to justify. We also discuss potential remedies.

In this paper, we show that moderate overconfidence in a contest can improve the agent's performance relative to an unbiased opponent and even lead to an advantage in absolute terms.