Resource allocation contests: Experimental evidence

Robert Shupp, Roman Sheremeta, David Schmidt and James Walker

Journal of Economic Psychology, 2013, vol. 39, issue C, 257-267

Abstract: Many resource allocation contests have the property that individuals undertake costly actions to appropriate a potentially divisible resource. We design an experiment to compare individuals’ decisions across three resource allocation contests which are isomorphic under risk-neutrality. The results indicate that in aggregate the single-prize contest generates lower expenditures than either the proportional-prize or the multi-prize contest. Interestingly, while the aggregate results indicate similar behavior in the proportional-prize and multi-prize contests, individual level analysis indicates that the behavior in the single-prize contest is more similar to the behavior in the multi-prize contest than in the proportional-prize contest. We also elicit preferences toward risk, ambiguity and losses, and find that while such preferences cannot explain individual behavior in the proportional-prize contest, preferences with regard to losses are predictive of behavior in both the single-prize and multiple-prize contests. Therefore, it appears that loss aversion is correlated with behavior in the single-prize and multi-prize contests where losses are likely to occur, but not in the proportional-prize contest where losses are unlikely.

Keywords: Contest; Rent-seeking; Experiments; Risk aversion; Game theory (search for similar items in EconPapers)
JEL-codes: C72 C92 D72 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (103)

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Related works:
Working Paper: Resource Allocation Contests: Experimental Evidence (2013)
Working Paper: Resource Allocation Contests: Experimental Evidence (2013)
Working Paper: Resource Allocation Contests: Experimental Evidence (2006)
Working Paper: Resource Allocation Contests: Experimental Evidence (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:39:y:2013:i:c:p:257-267

DOI: 10.1016/j.joep.2013.09.001

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