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Endogenous entry in contests

  • John Morgan

    ()

  • Henrik Orzen
  • Martin Sefton

We report the results of laboratory experiments on rent-seeking contests with endogenous participation. Theory predicts that (a) contest entry and rent-seeking expenditures increase with the size of the prize and (b) earnings are equalized between the contest and the outside option. While the directional predictions offered in (a) are supported in the data, the level predictions are not. Prediction (b) is not supported in the data: when the prize is large, contest participants earn more than the outside option. When the prize is small, contest participants earn less. Previous studies of gender and contest competition suggest that females should (a) not perform as well in the contest; and (b) enter at a lower rate. We find some support for (a) but not for (b). Women participate in the contest at the same rate as men. Copyright The Author(s) 2012

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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 51 (2012)
Issue (Month): 2 (October)
Pages: 435-463

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Handle: RePEc:spr:joecth:v:51:y:2012:i:2:p:435-463
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  1. Cason, Timothy & Masters, William & Sheremeta, Roman, 2010. "Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study," MPRA Paper 49886, University Library of Munich, Germany.
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