War of Attrition: Evidence From a Laboratory Experiment on Market Exit

Oprea, Ryan; Wilson, Bart J.; Zillante, Arthur

doi:10.1111/ecin.12014

Cited by 22 publications

(9 citation statements)

References 24 publications

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“…For all treatments, the authors test for evidence of bifurcation in empirically estimated bidding functions, but even in the all-pay auction, they find no significant evidence of the commonly-observed behavioral pattern. Oprea et al (2013) design an experiment based on the duopoly model of Fudenberg and Tirole (1986). In this model, two firms must decide whether or not to remain in a market or to exit.…”

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confidence: 99%

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

2012

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Many economic, political and social environments can be described as contests in which agents exert costly efforts while competing over the distribution of a scarce resource. These environments have been studied using Tullock contests, all-pay auctions and rank-order tournaments. This survey provides a comprehensive review of experimental research on these three canonical contests. First, we review studies investigating the basic structure of contests, including the number of players and prizes, spillovers and externalities, heterogeneity, risk and incomplete information. Second, we discuss dynamic contests and multi-battle contests. Then we review studies examining sabotage, feedback, bias, collusion, alliances, group contests and gender, as well as field experiments. Finally, we discuss applications of contests and suggest directions for future research. IntroductionMany economic, political and social environments can be described as contests in which competing agents have the opportunity to expend scarce resources -such as effort, money, time, or troops -in order to affect the probabilities of winning prizes. Examples range from the competition for mates, college admission, patents, or promotions within firms, to the process of litigation or lobbying politicians, to elections, sports competitions, and violent global conflicts (Tullock, 1967;Krueger, 1974). As is obvious from this list, these environments have attracted considerable attention in applications in a wide range of fields, both in-and out-side of economics. They have also been studied extensively by economic theorists in what has become known as the field of contest theory (Konrad, 2009). Although this field continues to attract many young theorists, it has its roots in three models developed in the mid-seventies to early eighties: the Tullock (1980) model of rent-seeking, the Lazear and Rosen (1981) rank-order tournament model, and the all-pay auction (Hirshleifer and Riley, 1978;Nalebuff and Stiglitz, 1983;Dasgupta, 1986;Hillman and Riley, 1989). Despite the fact that the three models historically developed somewhat independently, they represent special cases of a general contest model that can be formulated in a unified framework.Despite an extensive and established theoretical literature, much less effort has been devoted to empirically investigate individual behavior in different contests and compare such behavior with theoretical predictions. The main reason is that it is not trivial to measure individual effort in the field since the researcher can only observe the performance of contestants, which is a function of effort, ability and luck (Ericsson and Charness, 1994). The majority of empirical studies use either firm level data (Prendergast, 1999) or sports data (Szymanski, 2003). Because it is typically difficult to measure the actual effort expended by players in the field, almost all of these studies focus solely on investigating whether the pattern of outcomes is consistent with the theoretical predictions.Controlled experimen...

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confidence: 99%

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

2012

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“…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.…”

Section: War Of Attrition Games: Dynamic Contest Modelsmentioning

confidence: 57%

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

Kimbrough

Laughren

Sheremeta

2020

Journal of Economic Behavior & Organization

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We review the main economic models of war and conflict. These models vary in details, but their implications are qualitatively consistent, highlighting key commonalities across a variety of conflict settings. Recent empirical literature, employing both laboratory and field data, in many cases confirms the basic implications of conflict theory. However, this literature also presents important challenges to the way economists traditionally model conflict. We finish our review by suggesting ways to address these challenges.JEL classifications: D72, D74, F51, F52, F54, H56, N4, Q34

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“…For example, experimental studies of dynamic contests find that effort increases in the prize value and the size of intermediate rewards (Mago et al, 2013;Gelder and Kovenock, 2017), and that it decreases in the magnitude of "strategic momentum," i.e., how far one player is ahead of the other (Mago et al 2013;Mago and Sheremeta, 2018). Also, as predicted, asymmetric contests tend to be resolved in favor of the contestant with the advantage (DeScioli and Wilson, 2011;Oprea et al, 2013).…”

Section: Dynamic Contestsmentioning

confidence: 81%

“…Wilson (2011), and Oprea et al (2013). The tug-of-war -a dynamic contest in which a player wins the war if the difference in the number of battle victories exceeds some threshold -has been studied by Deck and Sheremeta (2017).…”

Section: Dynamic Contestsmentioning

confidence: 99%

Experimental Research on Contests

Sheremeta

2018

The New Palgrave Dictionary of Economics

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Costly competitions between economic agents are modeled as contests. Researchers use laboratory experiments to study contests and test comparative static predictions of contest theory. Commonly, researchers find that participants' efforts are significantly higher than predicted by the standard Nash equilibrium. Despite overbidding, most comparative static predictions, such as the incentive effect, the size effect, the discouragement effect and others are supported in the laboratory. In addition, experimental studies examine various contest structures, including dynamic contests (such as multi-stage races, wars of attrition, tug-of-wars), multi-dimensional contests (such as Colonel Blotto games), and contests between groups. This article provides a short review of such studies.

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War of Attrition: Evidence From a Laboratory Experiment on Market Exit

Cited by 22 publications

References 24 publications

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

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

Experimental Research on Contests

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