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Endowment Effects in Contests

Author

Listed:
  • Curtis R. Price

    () (Department of Economics & Finance, College of Business, University of Southern Indiana)

  • Roman M. Sheremeta

    () (Argyros School of Business and Economics, Chapman University)

Abstract

We design an experiment to test if the manner in which subjects receive the endowment has any bearing on the amount of overbidding in contests. We find that overbidding is significantly higher when subjects are given a large per-experiment endowment rather than when the endowment is given per-period. Risk-aversion and non-monetary utility of winning play important roles in explaining our findings.

Suggested Citation

  • Curtis R. Price & Roman M. Sheremeta, 2009. "Endowment Effects in Contests," Working Papers 09-07, Chapman University, Economic Science Institute.
  • Handle: RePEc:chu:wpaper:09-07
    as

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    File URL: http://www.chapman.edu/ESI/wp/EndowmentEffectsInContests-Sheremeta.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    rent-seeking; contest; experiments; overbidding; endowment;

    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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