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Endogenous Entry in Contests

  • John Morgan

    (Haas School of Business, University of California-Berkeley)

  • Henrik Orzen

    (School of Economics, University of Nottingham)

  • Martin Sefton

    (School of Economics, University of Nottingham)

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.

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Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-08.

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Date of creation: Jul 2008
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Handle: RePEc:cdx:dpaper:2008-08
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  2. Benedikt Herrmann & Henrik Orzen, 2008. "The appearance of homo rivalis: Social preferences and the nature of rent seeking," Discussion Papers 2008-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
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  13. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
  14. Ham, John C. & Kagel, John H., 2006. "Gender effects in private value auctions," Economics Letters, Elsevier, vol. 92(3), pages 375-382, September.
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  26. Chen, Yan & Katuščák, Peter & Ozdenoren, Emre, 2013. "Why canʼt a woman bid more like a man?," Games and Economic Behavior, Elsevier, vol. 77(1), pages 181-213.
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