IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Best-of-three contest experiments: Strategic versus psychological momentum

  • Mago, Shakun D.
  • Sheremeta, Roman M.
  • Yates, Andrew

We conduct an experimental analysis of a best-of-three Tullock 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 the 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., a momentum generated due to strategic incentives inherent in the contest. We do not find evidence for ‘psychological momentum’, i.e., a momentum which emerges when winning affects players' confidence. Similar to the previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between the subjects.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 31 (2013)
Issue (Month): 3 ()
Pages: 287-296

in new window

Handle: RePEc:eee:indorg:v:31:y:2013:i:3:p:287-296
Contact details of provider: Web page:

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.:

as in new window
  1. Potters, J.J.M. & de Vries, C.G. & van Winden, F.A.A.M., 1998. "An experimental examination of rational rentseeking," Other publications TiSEM 496ad30e-8453-4c83-a5e1-5, Tilburg University, School of Economics and Management.
  2. R. McKelvey & T. Palfrey, 2010. "Quantal Response Equilibria for Normal Form Games," Levine's Working Paper Archive 510, David K. Levine.
  3. Timothy N. Cason & Roman M. Sheremeta & Jingjing Zhang, 2012. "Communication and efficiency in competitive coordination games," IEW - Working Papers 505, Institute for Empirical Research in Economics - University of Zurich.
  4. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
  5. Richard B. Freeman & Alexander M. Gelber, 2010. "Prize Structure and Information in Tournaments: Experimental Evidence," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 149-64, January.
  6. Christopher Ferrall & Anthony A. Smith, 1999. "A Sequential Game Model Of Sports Championship Series: Theory And Estimation," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 704-719, November.
  7. Price, Curtis & Sheremeta, Roman, 2011. "Endowment Effects in Contests," MPRA Paper 52103, University Library of Munich, Germany.
  8. Simon, Curtis J. & Sheremeta, Roman, 2015. "Endowment Origin, Demographic Effects and Individual Preferences in Contests," MPRA Paper 67519, University Library of Munich, Germany.
  9. Sheremeta, Roman, 2009. "Expenditures and Information Disclosure in Two-Stage Political Contests," MPRA Paper 49887, University Library of Munich, Germany.
  10. McKee, Michael, 1989. "Intra-experimental income effects and risk aversion," Economics Letters, Elsevier, vol. 30(2), pages 109-115, August.
  11. Roman Studer, 2007. "India and the Great Divergence: Assessing the Efficiency of Grain Markets in Eighteenth- and Nineteenth-Century India," Economics Series Working Papers 68, University of Oxford, Department of Economics.
  12. Thomas Riechmann, 2007. "An analysis of rent-seeking games with relative-payoff maximizers," Public Choice, Springer, vol. 133(1), pages 147-155, October.
  13. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  14. Roman M. Sheremeta, 2009. "Experimental Comparison of Multi-Stage and One-Stage Contests," Working Papers 09-04, Chapman University, Economic Science Institute.
  15. Arkes, Hal R. & Blumer, Catherine, 1985. "The psychology of sunk cost," Organizational Behavior and Human Decision Processes, Elsevier, vol. 35(1), pages 124-140, February.
  16. Anya C. Savikhin & Roman M. Sheremeta, 2013. "Simultaneous Decision-Making In Competitive And Cooperative Environments," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1311-1323, 04.
  17. Konrad, Kai A. & Kovenock, Dan, 2006. "Multi-battle contests," Purdue University Economics Working Papers 1187, Purdue University, Department of Economics.
  18. 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.
  19. Dechenaux, Emmanuel & Kovenock, Dan & Sheremeta, Roman M., 2012. "A survey of experimental research on contests, all-pay auctions and tournaments," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2012-109, Social Science Research Center Berlin (WZB).
  20. Ham, John C. & Kagel, John H., 2006. "Gender effects in private value auctions," Economics Letters, Elsevier, vol. 92(3), pages 375-382, September.
  21. Wolfgang Leininger, 2003. "On evolutionarily stable behavior in contests," Economics of Governance, Springer, vol. 4(3), pages 177-186, November.
  22. Eyal Baharad & Shmuel Nitzan, 2008. "Contest Efforts in Light of Behavioural Considerations," Economic Journal, Royal Economic Society, vol. 118(533), pages 2047-2059, November.
  23. Cason, Timothy N. & Masters, William A. & Sheremeta, Roman M., 2010. "Entry into winner-take-all and proportional-prize contests: An experimental study," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 604-611, October.
  24. Lisa R. Anderson & Beth A. Freeborn, 2008. "Varying the Intensity of Competition in a Multiple Prize Rent Seeking Experiment," Working Papers 75, Department of Economics, College of William and Mary.
  25. Cary Deck & Roman M. Sheremeta, 2012. "Fight or Flight?," Journal of Conflict Resolution, Peace Science Society (International), vol. 56(6), pages 1069-1088, December.
  26. Vriend, Nicolaas J., 2000. "An illustration of the essential difference between individual and social learning, and its consequences for computational analyses," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 1-19, January.
  27. Mago, Shakun & Samak, Anya & Sheremeta, Roman, 2013. "Facing Your Opponents: Social Identification and Information Feedback in Contests," MPRA Paper 47029, University Library of Munich, Germany.
  28. Burkhard Hehenkamp & Wolfgang Leininger & Alex Possajennikov, 2003. "Evolutionary Equilibrium in Tullock Contests: Spite and Overdissipation," Discussion Papers in Economics 03_01, University of Dortmund, Department of Economics.
  29. Frans van Dijk & Joep Sonnemans & Frans van Winden, 2000. "Incentive Systems in a Real Effort Experiment," CESifo Working Paper Series 272, CESifo Group Munich.
  30. Roman Sheremeta & Jingjing Zhang, 2010. "Can groups solve the problem of over-bidding in contests?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 35(2), pages 175-197, July.
  31. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, vol. 22(1), pages 3-31, June.
  32. Shakun D. Mago & Roman M. Sheremeta, 2012. "Multi-Battle Contests: An Experimental Study," Working Papers 12-06, Chapman University, Economic Science Institute.
  33. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
  34. Sheremeta, Roman, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," MPRA Paper 44124, University Library of Munich, Germany.
  35. 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.
  36. Malueg, David A. & Yates, Andrew J., 2005. "Equilibria and comparative statics in two-player contests," European Journal of Political Economy, Elsevier, vol. 21(3), pages 738-752, September.
  37. Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
  38. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211.
  39. David A. Malueg & Andrew J. Yates, 2010. "Testing Contest Theory: Evidence from Best-of-Three Tennis Matches," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 689-692, August.
  40. Lisa Anderson & Beth Freeborn, 2010. "Erratum to: Varying the intensity of competition in a multiple prize rent seeking experiment," Public Choice, Springer, vol. 143(1), pages 255-256, April.
  41. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  42. David Bullock & E. Rutström, 2007. "Policy making and rent-dissipation: An experimental test," Experimental Economics, Springer, vol. 10(1), pages 21-36, March.
  43. Douglas Davis & Robert Reilly, 1998. "Do too many cooks always spoil the stew? An experimental analysis of rent-seeking and the role of a strategic buyer," Public Choice, Springer, vol. 95(1), pages 89-115, April.
  44. Kimbrough, Erik & Sheremeta, Roman, 2013. "Side-Payments and the Costs of Conflict," MPRA Paper 46808, University Library of Munich, Germany.
  45. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  46. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
  47. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 881-919.
  48. Hillman, Arye L & Katz, Eliakim, 1984. "Risk-Averse Rent Seekers and the Social Cost of Monopoly Power," Economic Journal, Royal Economic Society, vol. 94(373), pages 104-10, March.
  49. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
  50. Konrad, Kai A & Schlesinger, Harris, 1997. "Risk Aversion in Rent-Seeking and Rent-Augmenting Games," Economic Journal, Royal Economic Society, vol. 107(445), pages 1671-83, November.
  51. Millner, Edward L & Pratt, Michael D, 1991. "Risk Aversion and Rent-Seeking: An Extension and Some Experimental Evidence," Public Choice, Springer, vol. 69(1), pages 81-92, February.
  52. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 921-955.
  53. Yan Chen & Peter Katuscak & Emre Ozdenoren, 2005. "Why Can’t a Woman Bid More Like a Man?," CERGE-EI Working Papers wp275, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  54. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-34, November.
  55. Edward Millner & Michael Pratt, 1989. "An experimental investigation of efficient rent-seeking," Public Choice, Springer, vol. 62(2), pages 139-151, August.
  56. Klumpp, Tilman & Polborn, Mattias K., 2006. "Primaries and the New Hampshire Effect," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1073-1114, August.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:31:y:2013:i:3:p:287-296. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.