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An experimental study of sorting in group contests

  • Philip Brookins

    ()

    (Department of Economics, Florida State University)

  • John Lightle

    ()

    (Department of Economics, Florida State University)

  • Dmitry Ryvkin

    ()

    (Department of Economics, Florida State University)

We study experimentally the effects of sorting in contests between groups of heterogeneous players whose within-group efforts are perfect substitutes. The theory predicts that higher aggregate effort will be reached when variation in ability between groups is lower, i.e., by a more balanced sorting. In the experiment, we assign subjects to four types -- A, B, C, and D -- ranked by their cost of effort, with A having the lowest and D having the highest cost, and conduct contests between two groups of two players each. In the Balanced treatment, (A,D) groups (i.e., groups comprised of a type A and a type D player) compete with (B,C) groups, whereas in the Unbalanced treatment, (A,B) groups compete with (C,D) groups. We find substantial heterogeneity and overinvestment of efforts by all types in both treatments, including the "underdog" (C,D) group which surprisingly is not demoralized by the unbalanced matching. Despite strong overbidding, relative aggregate efforts are remarkably close to equilibrium predictions both between treatments and between groups within each treatment. The results confirm the prediction that balanced sorting leads to higher aggregate effort.

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File URL: ftp://econpapers.fsu.edu/RePEc/fsu/wpaper/wp2014_01_01.pdf
File Function: First version, 2014-01
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Paper provided by Department of Economics, Florida State University in its series Working Papers with number wp2014_01_01.

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Length: 25
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:fsu:wpaper:wp2014_01_01
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  9. Sheremeta, Roman, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," MPRA Paper 44124, University Library of Munich, Germany.
  10. Chowdhury, Subhasish & Lee, Dongryul & Sheremeta, Roman, 2013. "Top Guns May Not Fire: Best-Shot Group Contests with Group-Specific Public Good Prizes," MPRA Paper 46654, University Library of Munich, Germany.
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  12. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, March.
  13. Klaus Abbink & Jordi Brandts & Benedikt Herrmann & Henrik Orzen, 2007. "Inter-Group Conflict and Intra-Group Punishment in an Experimental Contest Game," Discussion Papers 2007-15, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  14. Sheremeta, Roman, 2011. "Perfect-Substitutes, Best-Shot, and Weakest-Link Contests between Groups," MPRA Paper 52105, University Library of Munich, Germany.
  15. Roman M. Sheremeta, 2009. "Contest Design: An Experimental Investigation," Working Papers 09-05, Chapman University, Economic Science Institute.
  16. Kyung Baik, 2008. "Contests with group-specific public-good prizes," Social Choice and Welfare, Springer, vol. 30(1), pages 103-117, January.
  17. Dechenaux, Emmanuel & Kovenock, Dan & Sheremeta, Roman M., 2012. "A survey of experimental research on contests, all-pay auctions and tournaments," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2012-109, Social Science Research Center Berlin (WZB).
  18. Lee, Dongryul, 2012. "Weakest-link contests with group-specific public good prizes," European Journal of Political Economy, Elsevier, vol. 28(2), pages 238-248.
  19. Ahn, T.K. & Isaac, R. Mark & Salmon, Timothy C., 2011. "Rent seeking in groups," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 116-125, January.
  20. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
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