Resource Allocation Contests: Experimental Evidence

David Schmidt, Robert Shupp and James Walker

No 2006-004, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: Across many forms of rent seeking contests, the impact of risk aversion on equilibrium play is indeterminate. We design an experiment to compare individuals’ decisions across three contests which are isomorphic under risk-neutrality, but are typically not isomorphic under other risk preferences. The pattern of individual play across our contests is not consistent with a Bayes-Nash equilibrium for any distribution of risk preferences. We show that replacing the Bayes-Nash equilibrium concept with the quantal response equilibrium, along with heterogeneous risk preferences can produce equilibrium patterns of play that are very similar to the patterns we observe.

Keywords: rent seeking; experiments; risk aversion; game theory (search for similar items in EconPapers)
JEL-codes: C72 C92 D72 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2005-02, Revised 2006-08
New Economics Papers: this item is included in nep-exp, nep-fmk, nep-gth, nep-knm and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)

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Related works:
Journal Article: Resource allocation contests: Experimental evidence (2013)
Working Paper: Resource Allocation Contests: Experimental Evidence (2013)
Working Paper: Resource Allocation Contests: Experimental Evidence (2013)
Working Paper: Resource Allocation Contests: Experimental Evidence (2005)
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