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Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes

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  • Francesco Fallucchi
  • Abhijit Ramalingam

Abstract

We investigate how individuals react to different types of asymmetries in experimental twoplayer Tullock contests where contestants expend resources to win a prize. We compare the effects of three different sources of asymmetry: resources, abilities and possible outcomes. We find that overall competitive effort is greater in the presence of asymmetric abilities than other inequalities. Unlike other forms, asymmetry in abilities elicits a very aggressive reaction from disadvantaged players relative to their advantaged opponents. Moreover, despite similar average efforts, contestants with an advantage in ability mostly play a ‘safe’ strategy that secures a higher likelihood of winning the contest, while other advantaged players strategically adapt their efforts to those of their opponents. The Quantal Response Equilibrium (QRE) suggests that financial incentives are less salient in the presence of a biased contest procedure. Key Words: rent seeking, contest, experiment, asymmetry, heuristics, QRE

Suggested Citation

  • Francesco Fallucchi & Abhijit Ramalingam, 2018. "Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes," Working Papers 18-16, Department of Economics, Appalachian State University.
    • Handle: RePEc:apl:wpaper:18-16
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    More about this item

    Keywords

    rent seeking; contest; experiment; asymmetry; heuristics; qre;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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