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Simultaneous Decision-Making in Competitive and Cooperative Environments

  • Anya Savikhin

    ()

    (The University of Chicago)

  • Roman M. Sheremeta

    ()

    (Argyros School of Business and Economics, Chapman University)

MWe experimentally investigate simultaneous decision-making in two contrasting environments: a competitive environment (a contest) and a cooperative environment (a voluntary contribution mechanism). We find that the cooperative nature of the voluntary contribution mechanism spills over to the contest, decreasing sub-optimal overbidding in the contest. However, contributions to the public good are not affected by simultaneous participation in the contest. There is a significant negative correlation between decisions made in competitive and cooperative environments, i.e. more cooperative subjects tend to be less competitive and vice versa. This correlation can be rationalized by heterogeneous social preferences towards inequality but not by bounded rationality theory.

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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 10-09.

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Length: 29 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:chu:wpaper:10-09
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