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Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests

Roman Sheremeta ()

Working Papers from Chapman University, Economic Science Institute

Abstract: Contests are commonly used in the workplace to motivate workers, determine promotion, and assign bonuses. Although contests can be very effective at eliciting high effort, they can also lead to inefficient effort expenditure (overbidding). Researchers have proposed various theories to explain overbidding in contents, including mistakes, systematic biases, the utility of winning, and relative payoff maximization. Using an eight-part experiment, we test and find significant support for the existing theories. Also, we discover some new explanations based on cognitive ability and impulsive behavior. Out of all explanations examined, we find that impulsivity is the most important factor explaining overbidding in contests.

Keywords: contest; overbidding; impulsive behavior; experiments (search for similar items in EconPapers)
JEL-codes: C72 C91 D01 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
Date: 2018
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https://www.chapman.edu/research/institutes-and-ce ... dding_2018_04_18.pdf

Related works:
Working Paper: Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests (2016) Downloads
Working Paper: Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:18-03

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