Resource Allocation Contests: Experimental Evidence

Schmidt, David; Shupp, Robert; Walker, James M.

doi:10.2139/ssrn.428022

Cited by 35 publications

(24 citation statements)

References 27 publications

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“…With two players rent-seeking expenditures are almost twice the predicted level, and for more than two players they find that total expenditures exceed the prize. In contrast, Schmidt et al (2006) find that with four players expenditures are 30% below predicted levels.…”

Section: Previous Experimentsmentioning

confidence: 56%

Endogenous entry in contests

2010

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We report the results of laboratory experiments on rent-seeking contests with endogenous participation. Theory predicts that (a) contest entry and rent-seeking expenditures increase with the size of the prize and (b) earnings are equalized between the contest and the outside option. While the directional predictions offered in (a) are supported in the data, the level predictions are not. Prediction (b) is not supported in the data: when the prize is large, contest participants earn more than the outside option. When the prize is small, contest participants earn less. Previous studies of gender and contest competition suggest that females should (a) not perform as well in the contest; and (b) enter at a lower rate. We find some support for (a) but not for (b). Women participate in the contest at the same rate as men.

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Section: Previous Experimentsmentioning

confidence: 56%

Endogenous entry in contests

2010

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“…In that study subjects were given the endowment of 120 francs instead of 60 and as a result the average effort was 34.1 instead of 30. A strong effect of the endowment on subjects' behavior can explain why some experimental studies (Schmidt et al, 2005;Shupp, 2004) find less rent-seeking expenditures than what is predicted by the equilibrium. …”

Section: Endowment Of 40mentioning

confidence: 98%

“…Previous experimental studies found a significant effect of risk aversion on the dissipation rate (Miller and Pratt, 1991). In our experiment, rather than estimating risk aversion from the observed choices in contest games (Goeree et al, 2002;Schmidt et al, 2005), in the first stage we used a simple lottery to elicit risk aversion from the subjects. 13 With the restriction on the endowment, the estimated level of mistakes, μ, also decreased in both treatments (Table 5.1).…”

Section: Risk Aversionmentioning

confidence: 99%

“…However, in the GC (40) treatment we still cannot reject the random play hypothesis. 14 In Schmidt et al (2005) and Shupp (2004) subjects were given a budget which allowed them to bid up to $20 while $13.5 was the Nash equilibrium prediction. Assuming a substantial level of mistakes made by subjects, the QRE approaches $10 and is below the Nash equilibrium.…”

Section: Risk Aversionmentioning

confidence: 99%

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Contest Design: An Experimental Investigation

Sheremeta

2009

SSRN Journal

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This paper experimentally compares the performance of four simultaneous lottery contests: a grand contest, two multiple prize settings (equal and unequal prizes), and a contest which consists of two subcontests. Consistent with the theory, the grand contest generates the highest effort levels among all simultaneous contests. In multi-prize settings, equal prizes produce lower efforts than unequal prizes. The results also support the argument that joint contests generate higher efforts than an equivalent number of subcontests. Contrary to the theory, there is significant over-dissipation. This over-dissipation can be partially explained by strong endowment size effects. Subjects who receive higher endowments tend to over-dissipate, while such over-dissipation disappears when the endowments are lower. This behavior is consistent with the predictions of a quantal response equilibrium. We also find that less risk-averse subjects over-dissipate more.JEL Classifications: C72, C91, D72

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“…As noted above, most studies find excessive rent-seeking expenditures relative to standard predictions. However, a few papers report contest behavior close to equilibrium (Shogren and Baik, 1991) or even below equilibrium (David Schmidt, Shupp and Walker, 2006).…”

mentioning

confidence: 99%

Intergroup Conflict and Intra-Group Punishment in an Experimental Contest Game

Abbink

Brandts

Herrmann

et al. 2010

American Economic Review

247

231

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We study how conflict in contest games is influenced by rival parties being groups and by group members being able to punish each other. Our motivation stems from the analysis of socio-political conflict. The theoretical prediction is that conflict expenditures are independent of group size and of whether punishment is available or not. We find, first, that conflict expenditures of groups are substantially larger than those of individuals, and both are above equilibrium. Second, allowing group members to punish each other leads to even larger conflict expenditures. These results contrast with those from public goods experiments where punishment enhances efficiency.

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Resource Allocation Contests: Experimental Evidence

Cited by 35 publications

References 27 publications

Endogenous entry in contests

Endogenous entry in contests

Contest Design: An Experimental Investigation

Intergroup Conflict and Intra-Group Punishment in an Experimental Contest Game

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