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Who Pays to Win Again? The Joy of Winning in Contest Experiments

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  • Luisa Herbst

Abstract

In contest experiments, overbidding is a widely observed phenomenon. One common explanation for overbidding is that winning in itself yields utility, termed the joy of winning. However, the joy of winning is difficult to observe and to quantify. This paper develops a novel, incentivized way to measure the individual-specific joy of winning as well as the frustrationof losing in a Tullock lottery contest. We find that the willingness to pay for a restart of the contest differs between winners and losers. Compared to a theoretical benchmark, winners are more satisfied and overbid forrestart of the contest, while losers are less satisfied and underbid. Further, effort levels are higher in the second contest, which can be explained by selection of high effort types with a high joy of winning into the restarted contest.

Suggested Citation

  • Luisa Herbst, 2016. "Who Pays to Win Again? The Joy of Winning in Contest Experiments," Working Papers tax-mpg-rps-2016-06, Max Planck Institute for Tax Law and Public Finance.
  • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2016-06
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    References listed on IDEAS

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    More about this item

    Keywords

    Bidding; contest; desire to win; effort; experiment; emotions; joy of winning; love of winning; overexpenditure;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • 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
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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