Best-of-three contest experiments: Strategic versus psychological momentum

Abstract

We conduct an experimental analysis of a best-of-three contest. Intermediate prizes lead to higher efforts, while increasing the role of luck (as opposed to effort) leads to lower efforts. Both intermediate prizes and luck reduce the probability of contest ending in two rounds. The patterns of players' efforts and the probability that a contest ends in two rounds are consistent with 'strategic momentum', i.e., momentum generated due to strategic incentives inherent in the contest. We do not find evidence for 'psychological momentum', i.e., momentum which emerges when winning affects players' confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects.JEL Classifications: C72, C91, D72

New Hampshire Effect: Behavior in Sequential and Simultaneous Election Contests

“…Experimental studies on sequential multi-battle contests have examined the impact of contest structure (Deck and Sheremeta, 2012), carryover (Schmitt et al, 2004), fatigue (Ryvkin, 2011), the length of the contest (Zizzo, 2002;Deck and Sheremeta, 2015), intermediate prizes and luck (Mago et al, 2013) on behavior in dynamic contests. 8 Most of these studies find support for the comparative statics predictions (see the review by Dechenaux et al, 2015), but often report significant over-expenditure of resources (also known as overbidding or over-dissipation) relative to the Nash equilibrium prediction (see the review by Sheremeta, 2013).…”

War and conflict in economics: Theories, applications, and recent trends

“…The flexibility available in such experiments allowed researchers to test a variety of implications of these models, including the consequences of asymmetry between players, fatigue, the length of competition, intermediate rewards, and contest structure. Echoing the findings of empirical studies, experimental studies find significant support for strategic momentum (Mago et al, 2013;Irfanoglu et al, 2015). Also, consistent with the theory, conflicts escalate with the introduction of intermediate rewards (Mago et al, 2013;Gelder and Kovenock, 2017), and asymmetric contests tend to be resolved in favor of the contestant with the advantage (DeScioli and Wilson, 2011;Oprea et al, 2013).…”

“…Echoing the findings of empirical studies, experimental studies find significant support for strategic momentum (Mago et al, 2013;Irfanoglu et al, 2015). Also, consistent with the theory, conflicts escalate with the introduction of intermediate rewards (Mago et al, 2013;Gelder and Kovenock, 2017), and asymmetric contests tend to be resolved in favor of the contestant with the advantage (DeScioli and Wilson, 2011;Oprea et al, 2013). However, contrary to the theoretical prediction of frontloading, conflicts tend to last too long and remain intense in the latter stages (Zizzo, 2002;Hörisch and Kirchkamp, 2010;Deck and Sheremeta, 2012;Deck and Kimbrough, 2015), though Ryvkin (2011) finds some evidence of conflict fatigue.…”

Aiming to Choose Correctly or to Choose Wisely? The Optimality-Accuracy Trade-Off in Decisions Under Uncertainty

“…This internal valuation of success has been highlighted in other contexts. Thinking about how individuals behave in contests, this same mechanism of induced utility of success has been obtained and referred as the joy of winning (Price and Sheremeta, 2011;Mago et al, 2013). To extend such findings in an individual setting is interesting as this utility is not driven by competition and the seek for out-performing our counterparts but only by internal challenge and self-ego.…”