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

Francesco Fallucchi () and Abhijit Ramalingam ()

No 2017-12, LISER Working Paper Series from LISER

Abstract: We study the effects of different sources of inequality in a commonplace economic interaction: competition. We investigate how individuals react to different types of inequality in experimental two-player Tullock contests where contestants expend resources to win a prize. We study three different sources of inequality: resources, abilities and possible outcomes. We find that overall competitive effort is greater in the presence of inequality in abilities than other inequalities. Unlike other forms, inequality in abilities elicits a very aggressive reaction from disadvantaged players relative to their advantaged opponents. The Quantal Response Equilibrium (QRE) suggests that financial incentives are less salient in the presence of a biased contest procedure.

Keywords: rent seeking; contest; experiment; inequality; inequity; Quantal Response Equilibrium (search for similar items in EconPapers)
JEL-codes: C91 C92 D31 D63 J78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-hrm and nep-lma
Date: 2017-07
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Working Paper: Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes (2018) Downloads
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