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Resource Allocation Contests: Experimental Evidence

Robert Shupp, Roman Sheremeta, David Schmidt and James Walker

Working Papers from Chapman University, Economic Science Institute

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 riskneutrality. 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)
Pages: 31 pages
Date: 2013
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (107)

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http://www.chapman.edu/research-and-institutions/e ... work-elicitation.pdf

Related works:
Journal Article: Resource allocation contests: Experimental evidence (2013) Downloads
Working Paper: Resource Allocation Contests: Experimental Evidence (2013) Downloads
Working Paper: Resource Allocation Contests: Experimental Evidence (2006) Downloads
Working Paper: Resource Allocation Contests: Experimental Evidence (2005) Downloads
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