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Multi-Battle Contests: An Experimental Study

Listed author(s):
  • Shakun D. Mago

    (Department of Economics, Robins School of Business, University of Richmond)

  • Roman M. Sheremeta

    ()

    (Argyros School of Business and Economics, Chapman University)

This study examines behavior of subjects in simultaneous and sequential multi-battle contests. In simultaneous contests, subjects make positive bids in each battle 80% of the time and bids fall within the predicted boundaries. However, 35% of the time subjects make positive bids in only two, instead of all three, battles and they significantly overuse moderately high bids. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contest proceeds to the third battle 38% of the time. Finally, in both simultaneous and sequential settings, subjects make higher aggregate bids than predicted resulting in negative expected payoffs.

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File URL: http://www.chapman.edu/ESI/wp/Sheremeta-Multi-Battle-Contests.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 12-06.

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Length: 35 pages
Date of creation: 2012
Handle: RePEc:chu:wpaper:12-06
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