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Contests with group size uncertainty: Experimental evidence

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  • Luke Boosey

    () (Department of Economics, Florida State University)

  • Philip Brookins

    () (Max Planck Institute for Research on Collective Goods)

  • Dmitry Ryvkin

    () (Department of Economics, Florida State University)

Abstract

In many contest situations, the number of participants is not observable at the time of investment. We design a laboratory experiment to study individual behavior in Tullock (lottery) contests with group size uncertainty. There is a fixed pool of n potential players, each with independent probability q of participating. As shown by Lim and Matros (2009; Games and Economic Behavior, vol. 67, pp. 584-597), the unique symmetric equilibrium investment level in this setting can exhibit nonmonotonicity with respect to both n and q. We independently manipulate each of the parameters and test the implied comparative statics predictions. Our results provide considerable support for the theory, both in terms of comparative statics and point predictions. Most surprisingly, we find no evidence of overbidding in treatments where there is a nontrivial probability that group size is one. This stands in stark contrast to the robust overbidding observed in experimental contests with deterministic group size. We propose a one-parameter model that incorporates nonlinear probability weighting and a modified version of joy of winning, which we call Constant Winning Aspirations (CWA), and show that it neatly organizes all of our results. The CWA model applies to a broad range of contexts and may be used to explain existing evidence on the differences in overbidding across many other contest and auction experiments.

Suggested Citation

  • Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2016. "Contests with group size uncertainty: Experimental evidence," Working Papers wp2016_07_01, Department of Economics, Florida State University.
  • Handle: RePEc:fsu:wpaper:wp2016_07_01
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    Cited by:

    1. repec:eee:gamebe:v:109:y:2018:i:c:p:65-81 is not listed on IDEAS
    2. Hillenbrand, Adrian & Winter, Fabian, 2018. "Volunteering under population uncertainty," Games and Economic Behavior, Elsevier, vol. 109(C), pages 65-81.
    3. Philip Brookins & Dmitry Ryvkin & Andrew Smyth, 2018. "Indefinitely Repeated Contests: An Experimental Study," Working Papers 18-01, Chapman University, Economic Science Institute.
    4. Boosey, Luke & Brookins, Philip & Ryvkin, Dmitry, 2019. "Contests between groups of unknown size," Games and Economic Behavior, Elsevier, vol. 113(C), pages 756-769.

    More about this item

    Keywords

    contest; group size uncertainty; experiment; overbidding; probability weighting; joy of winning; constant winning aspirations;

    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
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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