The Grant Proposal Game

Yevgeny Mugerman, Eyal Winter and Tomer Yafeh

No 423283787, Working Papers from Lancaster University Management School, Economics Department

Abstract: We explore strategic betting in competitive environments with multiple participants and potential winners. We examine two scenarios: an “inclusive†low-competition scenario with many winners and an “exclusive†high-competition scenario with few winners. Using a simple model, we illustrate the strategic insights in these scenarios and present experimental results that align with our predictions. In the experiment, participants made repeated bets with feedback on past results and their payoffs. In the inclusive scenario, all but the worst guessers were rewarded, while in the exclusive scenario, only the top guessers received rewards. Our findings show that in the inclusive scenario, participants exhibit herding behavior by coordinating their bets, while in the exclusive scenario, they diversify their bets across multiple options. The main general insight of our findings is that in moderate competitions, one tends to join the majority to avoid standing out in case of failure, whereas in intense competitions, one tends to differentiate oneself from one’s peers to ensure that success stands out. This insight is relevant for a broad domain of strategic interactions.

Keywords: Experimental Economics; Competitive Decision-Making; Herding Behavior; Divergence Strategy; Inclusive vs. Exclusive Scenarios; Multi-Winner Competition (search for similar items in EconPapers)
JEL-codes: C9 D7 D8 G1 L1 M3 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:lan:wpaper:423283787

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