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

Luisa Herbst

Working Papers from Max Planck Institute for Tax Law and Public Finance

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.

Keywords: Bidding; contest; desire to win; effort; experiment; emotions; joy of winning; love of winning; overexpenditure (search for similar items in EconPapers)
JEL-codes: C78 C91 D72 D74 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016-04
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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