Experimental Research on Contests

Sheremeta, Roman (2018): Experimental Research on Contests. Forthcoming in:

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Contest; All-pay auction; Tournament; Dynamic Contest; Multi-battle Contest; Multi-dimensional Contest; Group Contest; Rent-seeking; Experiment; Overbidding; Over-dissipation; Incentive Effect; Size Effect; Discouragement Effect; Strategic Momentum
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; C - Mathematical and Quantitative Methods > C9 - Design of Experiments; D - Microeconomics > D4 - Market Structure, Pricing, and Design; D - Microeconomics > D7 - Analysis of Collective Decision-Making; D - Microeconomics > D9 - Intertemporal Choice; H - Public Economics > H4 - Publicly Provided Goods; J - Labor and Demographic Economics > J4 - Particular Labor Markets; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics

References

Abbink, K., Brandts, J., Herrmann, B. & Orzen, H. (2010). Inter-group conflict and intra-group punishment in an experimental contest game. American Economic Review, 100, 420-447.

Ahn, T.K., R, Isaac, M. & Salmon, T.C. (2011). Rent seeking in groups. International Journal of Industrial Organization, 29, 116-125.

Amaldoss, W., Meyer, R.J., Raju, J.S. & Rapoport, A. (2000). Collaborating to compete: A game-theoretical model and empirical investigation of the effect of profit-sharing arrangement and type of alliance. Marketing Science, 19, 105-126.

Anderson, L.A. & Freeborn, B.A. (2010). Varying the intensity of competition in a multiple prize rent seeking experiment. Public Choice, 143, 237-254.

Arad, A. & Rubinstein, A. (2012). Multi-dimensional iterative reasoning in action: The case of the colonel blotto game. Journal of Economic Behavior and Organization, 84, 571-585.

Bernhard, H., Fischbacher, U., & Fehr, E. (2006). Parochial altruism in humans. Nature, 442, 912-915.

Bhattacharya, P. (2016). Inter-team contests with power differential. Journal of Economic Behavior & Organization, 132, 157-175.

Brookins, P., Lightle, J. P., & Ryvkin, D. (2015). An experimental study of sorting in group contests. Labour Economics, 35, 16-25.

Brookins, P., Lightle, J. P., & Ryvkin, D. (2018). Sorting and communication in weak-link group contests. Journal of Economic Behavior & Organization, 152, 64-80.

Cason, T. N., Masters, W. A., & Sheremeta, R. M. (2018). Winner-take-all and proportional-prize contests: Theory and experimental results. Journal of Economic Behavior & Organization, forthcoming.

Cason, T.N., Masters, W.A., & Sheremeta, R.M. (2010). Entry into winner-take-all and proportional-prize contests: An experimental study. Journal of Public Economics, 94, 604-611.

Cason, T.N., Sheremeta, R.M., & Zhang, J. (2012). Communication and efficiency in competitive coordination games. Games and Economic Behavior, 76, 26-43.

Cason, T.N., Sheremeta, R.M., & Zhang, J. (2017). Asymmetric and endogenous communication in competition between groups. Experimental Economics, 20, 946-972.

Chowdhury, S.M., & Gürtler, O. (2015). Sabotage in contests: a survey. Public Choice, 164, 135-155.

Chowdhury, S.M., Sheremeta, R.M., & Turocy, T.L. (2014). Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules. Games and Economic Behavior, 87, 224-238.

Connelly, B.L., Tihanyi, L., Crook, T.R., & Gangloff, K.A. (2014). Tournament theory thirty years of contests and competitions. Journal of Management, 40, 16-47.

Davis, D., & Reilly, R. (1998). Do many cooks always spoil the stew? An experimental analysis of rent seeking and the role of a strategic buyer. Public Choice, 95, 89-115.

Dechenaux, E., Kovenock, D., & Sheremeta, R. M. (2015). A survey of experimental research on contests, all-pay auctions and tournaments. Experimental Economics, 18, 609-669.

Deck, C., & Sheremeta, R.M. (2012). Fight or flight? Defending against sequential attacks in the game of siege. Journal of Conflict Resolution, 56, 1069-1088.

Deck, C., & Sheremeta, R.M. (2017). The tug-of-war in the laboratory. Working Paper.

Deck, C., Sarangi, S., & Wiser, M. (2017). An experimental investigation of simultaneous multi-battle contests with strategic complementarities. Journal of Economic Psychology, 63, 117-134.

DeScioli, P. & Wilson, B.J. (2011). The territorial foundations of human property. Evolution and Human Behavior, 32, 297-304.

Ericsson, K.A. & Charness, N. (1994). Expert performance: Its structure and acquisition. American Psychologist, 49, 725 - 747.

Fonseca, M.A. (2009). An experimental investigation of asymmetric contests. International Journal of Industrial Organization, 27, 582-591.

Gelder, A., & Kovenock, D. (2017). Dynamic behavior and player types in majoritarian multi-battle contests. Games and Economic Behavior, 104, 444-455.

Gill, D., & Prowse, V. (2012). A structural analysis of disappointment aversion in a real effort competition. American Economic Review, 102, 469-503.

Gneezy, U. & Smorodinsky, R. (2006). All-pay auctions – An experimental study. Journal of Economic Behavior and Organization, 61, 255-275.

Gunnthorsdottir, A., & Rapoport, A. (2006). Embedding social dilemmas in intergroup competition reduces free-riding. Organizational Behavior and Human Decision Processes, 101, 184-199.

Hargreaves Heap, S., Ramalingam, A., Ramalingam, S., & Stoddard, B. (2015). 'Doggedness' or 'disengagement'? An experiment on the effect of inequality in endowment on behavior in team competitions. Journal of Economic Behavior & Organization, 120, 80-93.

Hirshleifer, J. & Riley, J.G. (1978). Elements of the theory of auctions and contests. UCLA, Working Papers.

Holt, C., Kydd, A., Razzolini, L., & Sheremeta, R.M. (2016). The paradox of misaligned profiling: Theory and experimental evidence. Journal of Conflict Resolution, 60, 482-500.

Hörisch, H. & Kirchkamp, O. (2010). Less fighting than expected - Experiments with wars of attrition and all-pay auctions. Public Choice, 144, 347-367.

Ke, C. (2013). Fight alone or together? The need to belong. Working Paper.

Ke, C., Konrad, K.A. & Morath, F. (2013). Brothers in arms – An experiment on the alliance puzzle. Games and Economic Behavior, 77, 61-76.

Ke, C., Konrad, K.A., & Morath, F. (2015). Alliances in the shadow of conflict. Economic Inquiry, 53, 854-871.

Kimbrough, E.O., Laughren, K., & Sheremeta, R. (2018). War and conflict in economics: Theories, applications, and recent trends. Journal of Economic Behavior & Organization, forthcoming.

Kimbrough, E.O., Sheremeta, R.M. & Shields, T.W. (2014). When parity promotes peace: Resolving conflict between asymmetric agents. Journal of Economic Behavior and Organization, 99, 96-108.

Konrad, K.A. (2009). Strategy and dynamics in contests. New York, NY: Oxford University Press.

Kovenock, D., Roberson, B. & Sheremeta, R.M. (2018). The attack and defense of weakest-link networks. Public Choice, forthcoming.

Krueger, A.O. (1974). The political economy of the rent-seeking society. American Economic Review, 64, 291-303.

Kugler, T., Rapoport A. & Pazy, A. (2010). Public good provision in inter-group conflicts: Effects of asymmetry and profit-sharing rule. Journal of Behavioral Decision Making, 23, 421-438.

Lazear, E.P. & Rosen, S. (1981). Rank-order tournaments as optimum labor contracts. Journal of Political Economy, 89, 841-864.

Ledyard, J. (1995). Public goods: A survey of experimental research. In J. Kagel and A.E. Roth (Eds.) Handbook of Experimental Economics, Princeton, NJ.

Lim, W., Matros, A., & Turocy, T. L. (2014). Bounded rationality and group size in Tullock contests: Experimental evidence. Journal of Economic Behavior and Organization, 99, 155-167.

Llorente-Saguer, A., Sheremeta, R.M., & Szech, N. (2016). How to design contests between heterogeneous contestants: An experimental study of tie-breaks and bid-caps in all-pay auctions. Working Paper.

Mago, S.D. & Sheremeta, R.M. (2017). Multi-battle contests: An experimental study. Southern Economic Journal, 84, 407-425.

Mago, S.D., & Sheremeta, R.M. (2018). The New Hampshire effect: Behavior in sequential and simultaneous election contests. Experimental Economics, forthcoming.

Mago, S.D., Savikhin, A.C., & Sheremeta, R.M. (2016). Facing your opponents: Social identification and information feedback in contests. Journal of Conflict Resolution, 60, 459-481.

Mago, S.D., Sheremeta, R.M. & Yates, A. (2013). Best-of-three contest experiments: Strategic versus psychological momentum. International Journal of Industrial Organization, 31, 287-296.

Majerczyk, M., Sheremeta, R.M., & Tian, Y. (2017). Adding tournament to tournament: Combining between-team and within-team incentives. Working Paper.

Millner, E.L. & Pratt, M.D. (1989). An Experimental Investigation of Efficient Rent-Seeking. Public Choice, 62, 139-151.

Montero, M., Possajennikov, A., Sefton, M., & Turocy, T.L. (2016). Majoritarian Blotto contests with asymmetric battlefields: An experiment on Apex games. Economic Theory, 61, 55-89.

Morgan, J., Orzen, H. & Sefton, M. (2012). Endogenous entry in contests. Economic Theory, 51, 435-463.

Nalebuff, B.J. & Stiglitz, J.E. (1983). Prizes and incentives: Towards a general theory of compensation and competition. Bell Journal of Economics, 14, 21-43.

Olson, M.J., (1965). The logic of collective action. Cambridge, MA.: Harvard University Press.

Oprea, R., Wilson, B.J. & Zillante, A. (2013). War of attrition: Evidence from a laboratory experiment on market exit. Economic Inquiry, 51, 2018–2027.

Potters, J.C., De Vries, C.G., & Van Winden, F. (1998). An experimental examination of rational rent seeking. European Journal of Political Economy, 14, 783-800.

Prendergast, C. (1999). The provision of incentives in firms. Journal of Economic Literature, 37, 7-63.

Price, C.R., & Sheremeta, R.M. (2011). Endowment effects in contests. Economics Letters, 111, 217-219.

Price, C.R., & Sheremeta, R.M. (2015). Endowment origin, demographic effects and individual preferences in contests. Journal of Economics and Management Strategy, 24, 597-619.

Rapoport, A., & Bornstein, G. (1989). Solving public goods problems in competition between equal and unequal size groups. Journal of Conflict Resolution, 33, 460-479.

Ryvkin, D. (2011). Fatigue in dynamic tournaments. Journal of Economics and Management Strategy, 20, 1011-1041.

Schotter, A., & Weigelt, K. (1992). Asymmetric tournaments, equal opportunity laws, and affirmative action: Some experimental results. Quarterly Journal of Economics, 107, 511-539.

Sheremeta, R.M. (2010). Experimental comparison of multi-stage and one-stage contests. Games and Economic Behavior, 68, 731-747.

Sheremeta, R.M. (2011). Contest design: An experimental investigation. Economic Inquiry, 49, 573-590.

Sheremeta, R.M. (2011). Perfect-substitutes, best-shot, and weakest-link contests between groups. Korean Economic Review, 27, 5-32.

Sheremeta, R.M. (2013). Overbidding and heterogeneous behavior in contest experiments. Journal of Economic Surveys, 27, 491-514.

Sheremeta, R.M. (2015). Behavioral dimensions of contests. In Congleton, R.D., Hillman, A.L., (Eds.), Companion to political economy of rent seeking, London: Edward Elgar, pp. 150-164.

Sheremeta, R.M. (2016). The pros and cons of workplace tournaments. IZA World of Labor, 302, 1-10.

Sheremeta, R.M. (2017). Impulsive behavior in competition: Testing theories of overbidding in rent-seeking contests. Working Paper.

Sheremeta, R.M. (2018). Behavior in group contests: A review of experimental research. Journal of Economic Surveys, forthcoming.

Sheremeta, R.M., & Zhang, J. (2010). Can groups solve the problem of over-bidding in contests? Social Choice and Welfare, 35, 175-197.

Shogren, J.F. & Baik, K.H. (1992). Favorites and underdogs: Strategic behavior in an experimental contest. Public Choice, 74, 191-205.

Szymanski, S. (2003). The economic design of sporting contests. Journal of Economic Literature, 41, 1137-1187.

Tullock, G. (1980). Efficient rent seeking. In James M. Buchanan, Robert D. Tollison, Gordon Tullock, (Eds.), Toward a theory of the rent-seeking society. College Station, TX: Texas A&M University Press, pp. 97-112.

Vogt, C., Weimann, J. & Yang, C.L. (2002). Efficient rent-seeking in experiment. Public Choice, 110, 67-78.

Vojnovic, M. (2016). Contest theory: Incentive mechanisms and ranking methods. Cambridge University Press.

Weigelt, K., Dukerich, J., & Schotter, A. (1989). Reactions to discrimination in an incentive pay compensation scheme: A game-theoretic approach. Organizational Behavior and Human Decision Processes, 44, 26-44.

Weimann, J., Yang, C.L. & Vogt, C. (2000). An experiment on sequential rent seeking. Journal of Economic Behavior and Organization, 41, 405-426.

Zizzo, D.J. (2002). Racing with uncertainty: A patent race experiment. International Journal of Industrial Organization, 20, 877-902.