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Best-of-Three Contest Experiments: Strategic versus Psychological Momentum

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  • Shakun D. Mago

    ()
    (Department of Economics, Robins School of Business)

  • Roman M. Sheremeta

    (Argyros School of Business and Economics, Chapman University)

  • Andrew Yates

    (Department of Economics, University of North Carolina at Chapel Hill)

Abstract

We conduct an experimental analysis of a best-of-three contest. Intermediate prizes lead to higher efforts, while increasing the role of luck (as opposed to effort) leads to lower efforts. Both intermediate prizes and luck reduce the probability of contest ending in two rounds. The patterns of players’ efforts and the probability that a contest ends in two rounds are consistent with ‘strategic momentum’, i.e., momentum generated due to strategic incentives inherent in the contest. We do not find evidence for ‘psychological momentum’, i.e., momentum which emerges when winning affects players’ confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects.

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Bibliographic Info

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 12-30.

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Length: 44 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:chu:wpaper:12-30

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Keywords: best-of-three contest; experiments; strategic momentum; psychological momentum;

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References

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Cited by:
  1. Erik O Kimbrough & Roman M Sheremeta, 2014. "Why can’t we be friends? Entitlements and the costs of conflict," Working Papers 14-01, Chapman University, Economic Science Institute.
  2. 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.
  3. Qiang Fu & Changxia Ke & Fangfang Tan, 2013. ""Success breeds success" or "Pride goes before a fall"? Teams and Individuals in Best-of-Three Contests," Working Papers tax-mpg-rps-2013-06, Max Planck Institute for Tax Law and Public Finance.
  4. Roman M. Sheremeta, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," Working Papers 13-06, Chapman University, Economic Science Institute.
  5. Shakun D. Mago & Anya C. Savikhin & Roman M. Sheremeta, 2012. "Facing Your Opponents: Social identification and information feedback in contests," Working Papers 12-15, Chapman University, Economic Science Institute.

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