31 research outputs found
Best-of-Three Contests: Experimental Evidence
We conduct an experimental analysis of a best-of-three Tullock 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 is consistent with âstrategic momentum?, i.e. momentum generated due to strategic incentives inherent in the contest. We do not find evidence for âpsychological 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.best-of-three contest, experiments, strategic momentum, psychological momentum
Multi-Battle Contests: An Experimental Study
We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous best-of-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning
New Hampshire Effect: Behavior in Sequential and Simultaneous Multi-Battle Contests
Sequential multi-battle contests are predicted to induce lower expenditure than simultaneous contests. This prediction is a result of a âNew Hampshire Effectâ â a strategic advantage created by the winner of the first battle. Although our laboratory study provides evidence for the New Hampshire Effect, we find that sequential contests generate significantly higher (not lower) expenditure than simultaneous contests. This is mainly because in sequential contests, there is significant over-expenditure in all battles. We suggest sunk cost fallacy and utility of winning as two complementary explanations for this behavior and provide supporting evidence
New Hampshire Effect: Behavior in Sequential and Simultaneous Multi-Battle Contests
Sequential multi-battle contests are predicted to induce lower expenditure than simultaneous contests. This prediction is a result of a âNew Hampshire Effectâ â a strategic advantage created by the winner of the first battle. Although our laboratory study provides evidence for the New Hampshire Effect, we find that sequential contests generate significantly higher (not lower) expenditure than simultaneous contests. This is mainly because in sequential contests, there is significant over-expenditure in all battles. We suggest sunk cost fallacy and utility of winning as two complementary explanations for this behavior and provide supporting evidence
Multi-Battle Contests: An Experimental Study
We examine behavior of subjects in simultaneous and sequential multi-battle contests, where each individual battle is modeled as an all-pay auction with complete information. In simultaneous best-of-three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceeds to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multi-dimensional iterative reasoning and a non-monetary utility of winning
New Hampshire Effect: Behavior in Sequential and Simultaneous Election Contests
Sequential contests are predicted to induce lower expenditure than simultaneous contests. This prediction is a result of a âNew Hampshire Effectâ â a strategic advantage created by the winner of the first battle. Contrary to this prediction, however, our laboratory study of the three-battle contests shows that sequential contests generate significantly higher expenditure than simultaneous contests. In case of sequential contests, we observe significant over-expenditure in all three battles and find no evidence of the âNew Hampshire Effect.â Despite the strategic advantage, winners of the first battle make similar expenditures in the second battle as losers of the first battle. Moreover, instead of decreasing, subjects increase their expenditure in the second battle relative to the first battle. In case of simultaneous contests, subjects do not employ a uniform expenditure strategy and instead use a âguerilla warfareâ strategy by focusing on only two of the three battles. We propose several explanations for these findings and discuss some implications
Best-of-Three Contest Experiments: Strategic versus Psychological Momentum
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 playersâ efforts and the probability that a contest ends in two rounds are consistent with âstrategic momentumâ, i.e., momentum generated due to strategic incentives inherent in the contest. We do not find evidence for âpsychological momentumâ, i.e., momentum which emerges when winning affects playersâ confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects
Best-of-Three Contest Experiments: Strategic versus Psychological Momentum
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 playersâ efforts and the probability that a contest ends in two rounds are consistent with âstrategic momentumâ, i.e., momentum generated due to strategic incentives inherent in the contest. We do not find evidence for âpsychological momentumâ, i.e., momentum which emerges when winning affects playersâ confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects
Facing Your Opponents: Social Identification and Information Feedback in Contests
We experimentally investigate the effect of social identification and information feedback on individual behavior in contests. In all treatments we find significant over-expenditure of effort relative to the standard theoretical predictions. Identifying subjects through photo display decreases wasteful effort. Providing information feedback about othersâ effort does not affect the aggregate effort, but it decreases the heterogeneity of effort and significantly affects the dynamics of individual behavior. We develop a behavioral model which incorporates a non-monetary utility of winning and relative payoff maximization. The model explains significant over-expenditure of effort. It also suggests that decrease in âsocial distanceâ between group members through photo display promotes pro-social behavior and decreases over-expenditure of effort, while improved information feedback decreases the heterogeneity of effort
Best-of-Three Contests: Experimental Evidence
We conduct an experimental analysis of a best-of-three Tullock 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 playersâ efforts and the probability that a contest ends in two rounds is consistent with âstrategic momentumâ, i.e. momentum generated due to strategic incentives inherent in the contest. We do not find evidence for âpsychological momentumâ, i.e. momentum which emerges when winning affects playersâ confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects