IDEAS home Printed from https://ideas.repec.org/p/zbw/wzbmbh/spii2019206.html
   My bibliography  Save this paper

Contests within and between groups

Author

Listed:
  • Bhattacharya, Puja
  • Rampal, Jeevant

Abstract

This paper examines behavior (the oretically and experimentally) in a two-stage group contest where the fi rst stage comprises of intra - group contests, followed by an inter-group contest in the second stage. Rewards accrue only to the members of the winning group in the inter-group contest, with the winners of the intra-group contest within that group receiving a greater reward. The model generates a discouragement effect, where losers from the first stage exert less effort in the second stage than winners. In contrast to previous frameworks of sequential contests, we show that a prior win may be disadvantageous, generating lower profits for first stage winners as compared to losers. We also consider asymmetry between groups arising from a biased contest success function in the second stage. We show that although the asymmetry occurs in the second stage, the effect of the asymmetry plays out in the first stage, with the intra-group contest being more intense within the advantaged group. Experimental results find broad support for the qualitative predictions of the model. However, we find that relative overcontribution in the second stage by losers is higher than by winners of the first stage, implying that losers bear a higher burden of the group contribution than deemed strategic.

Suggested Citation

  • Bhattacharya, Puja & Rampal, Jeevant, 2019. "Contests within and between groups," Discussion Papers, Research Unit: Market Behavior SP II 2019-206, WZB Berlin Social Science Center.
  • Handle: RePEc:zbw:wzbmbh:spii2019206
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/200137/1/1667387960.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Stracke, Rudi & Sunde, Uwe, 2014. "Dynamic Incentive Effects of Heterogeneity in Multi-Stage Promotion Contests," IZA Discussion Papers 8368, Institute of Labor Economics (IZA).
    2. Andrew Schotter & Keith Weigelt, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 511-539.
    3. Klaus Abbink & Jordi Brandts & Benedikt Herrmann & Henrik Orzen, 2010. "Intergroup Conflict and Intra-group Punishment in an Experimental Contest Game," American Economic Review, American Economic Association, vol. 100(1), pages 420-447, March.
    4. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2015. "Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field," Economics Series 319, Institute for Advanced Studies.
    5. William E. Stein & Amnon Rapoport, 2004. "Asymmetric Two-Stage Group Rent-Seeking: Comparison of Two Contest Structures," Public Choice, Springer, vol. 118(1_2), pages 151-167, January.
    6. Klumpp, Tilman & Polborn, Mattias K., 2006. "Primaries and the New Hampshire Effect," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1073-1114, August.
    7. Eriksson, Tor & Poulsen, Anders & Villeval, Marie Claire, 2009. "Feedback and incentives: Experimental evidence," Labour Economics, Elsevier, vol. 16(6), pages 679-688, December.
    8. Sheremeta, Roman M., 2010. "Experimental comparison of multi-stage and one-stage contests," Games and Economic Behavior, Elsevier, vol. 68(2), pages 731-747, March.
    9. Shakun D. Mago & Roman M. Sheremeta, 2019. "New Hampshire Effect: behavior in sequential and simultaneous multi-battle contests," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 325-349, June.
    10. Roman M. Sheremeta, 2010. "Expenditures and Information Disclosure in Two-Stage Political Contests," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(5), pages 771-798, October.
    11. Konrad, Kai A., 2004. "Bidding in hierarchies," European Economic Review, Elsevier, vol. 48(6), pages 1301-1308, December.
    12. Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, vol. 109(458), pages 536-545, October.
    13. 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.
    14. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2015. "The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 521-569.
    15. David S. Lee, 2001. "The Electoral Advantage to Incumbency and Voters' Valuation of Politicians' Experience: A Regression Discontinuity Analysis of Elections to the U.S..," NBER Working Papers 8441, National Bureau of Economic Research, Inc.
    16. Steffen Altmann & Armin Falk & Matthias Wibral, 2012. "Promotions and Incentives: The Case of Multistage Elimination Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 149-174.
    17. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    18. Mago, Shakun D. & Sheremeta, Roman M. & Yates, Andrew, 2013. "Best-of-three contest experiments: Strategic versus psychological momentum," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 287-296.
    19. Kyung Baik, 2008. "Contests with group-specific public-good prizes," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(1), pages 103-117, January.
    20. Beviá, Carmen & Corchón, Luis C., 2013. "Endogenous strength in conflicts," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 297-306.
    21. Roman M. Sheremeta, 2013. "Overbidding And Heterogeneous Behavior In Contest Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 491-514, July.
    22. Chowdhury, Subhasish M. & Sheremeta, Roman M. & Turocy, Theodore L., 2014. "Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules," Games and Economic Behavior, Elsevier, vol. 87(C), pages 224-238.
    23. Roman M. Sheremeta, 2011. "Perfect-Substitutes, Best-Shot, and Weakest-Link Contests between Groups," Korean Economic Review, Korean Economic Association, vol. 27, pages 5-32.
    24. Muller, Holger M & Warneryd, Karl, 2001. "Inside versus Outside Ownership: A Political Theory of the Firm," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 527-541, Autumn.
    25. Brookins, Philip & Lightle, John P. & Ryvkin, Dmitry, 2015. "An experimental study of sorting in group contests," Labour Economics, Elsevier, vol. 35(C), pages 16-25.
    26. Stracke, Rudi & Höchtl, Wolfgang & Kerschbamer, Rudolf & Sunde, Uwe, 2014. "Optimal prizes in dynamic elimination contests: Theory and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 43-58.
    27. Hargreaves Heap, Shaun P. & Ramalingam, Abhijit & Ramalingam, Siddharth & Stoddard, Brock V., 2015. "‘Doggedness’ or ‘disengagement’? An experiment on the effect of inequality in endowment on behaviour in team competitions," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 80-93.
    28. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
    29. Jonah Berger & Devin Pope, 2011. "Can Losing Lead to Winning?," Management Science, INFORMS, vol. 57(5), pages 817-827, May.
    30. Reut Megidish & Aner Sela, 2014. "Sequential contests with synergy and budget constraints," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(1), pages 215-243, January.
    31. Qiang Fu & Jingfeng Lu, 2012. "The optimal multi-stage contest," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 351-382, October.
    32. Bhattacharya, Puja, 2016. "Inter-team contests with power differential," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 157-175.
    33. Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
    34. Cohen-Zada, Danny & Krumer, Alex & Shtudiner, Ze'ev, 2017. "Psychological momentum and gender," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 66-81.
    35. repec:eee:gamebe:v:110:y:2018:i:c:p:258-272 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Contests; Group Behavior; Collective Action; Asymmetry;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:wzbmbh:spii2019206. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/vawzbde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.