Munich Personal RePEc Archive

Experimental Comparison of Multi-Stage and One-Stage Contests

Sheremeta, Roman (2009): Experimental Comparison of Multi-Stage and One-Stage Contests. Published in: Games and Economic Behavior

[img]
Preview
PDF
MPRA_paper_49884.pdf

Download (580kB) | Preview

Abstract

This article experimentally studies a two-stage elimination contest and compares its performance with a one-stage contest. Contrary to the theory, the two-stage contest generates higher revenue than the equivalent one-stage contest. There is significant over-dissipation in both stages of the two-stage contest and experience diminishes over-dissipation in the first stage but not in the second stage. Our experiment provides evidence that winning is a component in a subject’s utility. A simple behavioral model that accounts for a non-monetary utility of winning can explain significant over-dissipation in both contests. It can also explain why the two-stage contest generates higher revenue than the equivalent one-stage contest.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.