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Grind Or Gamble? An Experiment On Effort And Spread Seeking In Contests

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  • Ola Andersson
  • Håkan J. Holm
  • Erik Wengström

Abstract

We conduct a contest experiment to study if spread seeking and effort can be managed when participants can invest in increasing both the mean and the spread of an uncertain performance variable. Subjects are treated with different prize schemes and in accordance with theory, we observe higher investments in spread for the winner‐take‐all scheme. Both types of investments can be controlled with a three‐level prize scheme. However, the control management is imperfect and behavior is characterized by inertia. We also explore the correlation between effort and spread across subjects and find that is robustly positive.

Suggested Citation

  • Ola Andersson & Håkan J. Holm & Erik Wengström, 2020. "Grind Or Gamble? An Experiment On Effort And Spread Seeking In Contests," Economic Inquiry, Western Economic Association International, vol. 58(1), pages 169-183, January.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:1:p:169-183
    DOI: 10.1111/ecin.12852
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    Cited by:

    1. Usvitskiy, Alexander, 2022. "Strategic risk-taking in dynamic contests," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 511-534.

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