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Endogenous Entry in Contests

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Author Info
John Morgan (Haas School of Business, University of California-Berkeley)
Henrik Orzen (School of Economics, University of Nottingham)
Martin Sefton (School of Economics, University of Nottingham)

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Abstract

We report the results of laboratory experiments on rent-seeking contests with endogenous participation. Theory predicts that (a) contest entry and rent-seeking expenditures increase with the size of the prize; and (b) earnings are equalized between the contest and the outside option. While the directional predictions offered in (a) are supported in the data, the level predictions are not. Prediction (b) is not supported in the data: When the prize is large, contest participants earn more than the outside option. When the prize is small, contest participants earn less. Previous studies of gender and contest competition suggest that females should (a) not perform as well in the contest; and (b) enter at a lower rate. We find some support for (a) but not for (b). Women participate in the contest at the same rate as men.

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Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-08.

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Date of creation: Jul 2008
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Handle: RePEc:cdx:dpaper:2008-08

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Related research
Keywords: Contests; Competition; Entry; Experiments;

Other versions of this item:

Find related papers by JEL classification:
C9 - Mathematical and Quantitative Methods - - Design of Experiments
D4 - Microeconomics - - Market Structure and Pricing
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. John Cadigan & Pamela Schmitt & Kurtis Swope & Robert Shupp, 2004. "Multi-Period Rent-Seeking Contests with Carryover: Theory and Experimental Evidence," Departmental Working Papers 5, United States Naval Academy Department of Economics. [Downloadable!]
    Other versions:
  2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," IZA Discussion Papers 1730, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. John Morgan & Henrik Orzen & Martin Sefton, 2006. "Network architecture and traffic flows," Discussion Papers 2006-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  4. Hehenkamp, B. & Leininger, W. & Possajennikov, A., 2004. "Evolutionary equilibrium in Tullock contests: spite and overdissipation," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1045-1057, November. [Downloadable!] (restricted)
    Other versions:
  5. Xiaojing Kong, 2008. "Loss Aversion and Rent-Seeking: An Experimental Study," Discussion Papers 2008-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  6. Miguel A. Fonseca, 2006. "It's not how you play the game, it's winning that matters: an experimental investigation of asymmetric contests," DOCUMENTOS DE CERAC 002927, CERAC -CENTRO DE RECURSOS PARA EL ANÁLISIS DE CONFLICTOS-. [Downloadable!]
  7. Benedikt Herrmann & Henrik Orzen, 2008. "The appearance of homo rivalis: Social preferences and the nature of rent seeking," Discussion Papers 2008-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  8. Thomas Cusack & Amihai Glazer & Kai Konrad, 2007. "Introduction," Economics of Governance, Springer, vol. 8(3), pages 179-179, May. [Downloadable!] (restricted)
  9. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away from Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1067-1101, 08. [Downloadable!] (restricted)
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  10. Shogren, Jason F & Baik, Kyung H, 1991. " Reexamining Efficient Rent-Seeking in Laboratory Markets," Public Choice, Springer, vol. 69(1), pages 69-79, February.
  11. David Schmidt & Robert Shupp & James M. Walker, 2005. "Resource Allocation Contests: Experimental Evidence," Caepr Working Papers 2006-004, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington, revised Aug 2006. [Downloadable!]
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  12. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May. [Downloadable!] (restricted)
  13. Timothy Mathews & Soiliou Namoro, 2008. "Participation incentives in rank order tournaments with endogenous entry," Journal of Economics, Springer, vol. 95(1), pages 1-23, October. [Downloadable!] (restricted)
  14. Uri Gneezy & Muriel Niederle & Aldo Rustichini, 2003. "Performance In Competitive Environments: Gender Differences," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 1049-1074, August. [Downloadable!] (restricted)
  15. Klaus Abbink & Jordi Brandts & Benedikt Herrmann & Henrik Orzen, 2008. "Inter-Group Conflict and Intra-Group Punishment in an Experimental Contest Game," UFAE and IAE Working Papers 723.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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  16. Anderson, Lisa R & Stafford, Sarah L, 2003. " An Experimental Analysis of Rent Seeking under Varying Competitive Conditions," Public Choice, Springer, vol. 115(1-2), pages 199-216, April. [Downloadable!] (restricted)
  17. Jacinto Braga & Steven Humphrey & Chris Starmer, 2006. "Market Experience Eliminates Some Anomalies – And Creates New Ones," Discussion Papers 2006-19, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Benedikt Herrmann & Henrik Orzen, 2008. "The appearance of homo rivalis: Social preferences and the nature of rent seeking," Discussion Papers 2008-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
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