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Endogenous group formation in experimental contests

  • Herbst, Luisa
  • Konrad, Kai A.
  • Morath, Florian

We study endogenous group formation in tournaments employing experimental threeplayer contests. We find that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending effort above average choose to stand alone. If these players are forced to play in an alliance, they invest even more, whereas their co-players choose lower effort. Anticipation of this exploitation may explain their preference to stand alone.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Economics of Change with number SP II 2013-301.

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Date of creation: 2013
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Handle: RePEc:zbw:wzbeoc:spii2013301
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