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We explore how models of boundedly-rational decision-making in games can explain the overdissipation of rents in laboratory Tullock contest games. Using a new series of experiments in which group size is varied across sessions, we find that models based on logit choice organize the data well. In this setting, logit quantal response equilibrium (QRE) is a limit of a cognitive hierarchy (CH) model with logit best responses for appropriate parameters. While QRE captures the data well, the CH fits provide support for relaxing the equilibrium assumption. Both the QRE and CH models have parameters which capture boundedness of rationality. The maximum likelihood fits of both models yield parameters indicating rationality is more restricted as group size grows. Period- by-period adjustments of expenditures are more likely to be in the earnings-improving direction in smaller groups

We study Tullock's (1980) n-player contest when each player has an independent probability 0 < p ≤ 1 of participating. A unique symmetric equilibrium is found for any n and p and its properties are analyzed. In particular, we show that for a fixed n > 2 individual equilibrium spending as a function of p is single-peaked and satisfies a single-crossing property for any two different numbers of potential players. However, total equilibrium spending is monotonically increasing in p and n. We also demonstrate that ex-post overdissipation is a feature of the pure-strategy equilibrium in our model. It turns out that if the contest designer can strategically decide whether to reveal the actual number of participating players or not, then the actual number of participants is always revealed.