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Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes

Francesco Fallucchi () and Abhijit Ramalingam ()

No 18-16, Working Papers from Department of Economics, Appalachian State University

Abstract: We investigate how individuals react to different types of asymmetries in experimental twoplayer Tullock contests where contestants expend resources to win a prize. We compare the effects of three different sources of asymmetry: resources, abilities and possible outcomes. We find that overall competitive effort is greater in the presence of asymmetric abilities than other inequalities. Unlike other forms, asymmetry in abilities elicits a very aggressive reaction from disadvantaged players relative to their advantaged opponents. Moreover, despite similar average efforts, contestants with an advantage in ability mostly play a ‘safe’ strategy that secures a higher likelihood of winning the contest, while other advantaged players strategically adapt their efforts to those of their opponents. The Quantal Response Equilibrium (QRE) suggests that financial incentives are less salient in the presence of a biased contest procedure. Key Words: rent seeking, contest, experiment, asymmetry, heuristics, QRE

JEL-codes: C91 C92 D31 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-hrm
Date: 2018
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Working Paper: Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:apl:wpaper:18-16

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