Experimental comparison of multi-stage and one-stage contests
AbstractThis 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 68 (2010)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/inca/622836
Rent-seeking Contest Contest design Experiments Risk aversion Over-dissipation;
Other versions of this item:
- Roman M. Sheremeta, 2009. "Experimental Comparison of Multi-Stage and One-Stage Contests," Working Papers 09-04, Chapman University, Economic Science Institute.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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