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Experimental Comparison of Multi-Stage and One-Stage Contests

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  • Sheremeta, Roman

Abstract

This 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 Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49884.

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Date of creation: 16 Jul 2009
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Handle: RePEc:pra:mprapa:49884

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Keywords: rent-seeking; contest; contest design; experiments; risk aversion; over-dissipation;

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