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

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

Abstract

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.

Suggested Citation

  • Mago, Shakun D. & Sheremeta, Roman M. & Yates, Andrew, 2013. "Best-of-three contest experiments: Strategic versus psychological momentum," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 287-296.
    • Handle: RePEc:eee:indorg:v:31:y:2013:i:3:p:287-296
    DOI: 10.1016/j.ijindorg.2012.11.006
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    Keywords

    Best-of-three contest; Experiments; Strategic momentum; Psychological momentum;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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