Resource Allocation Contests: Experimental Evidence

Robert Shupp and Roman Sheremeta

MPRA Paper from University Library of Munich, Germany

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 C91 C92 D72 (search for similar items in EconPapers)
Date: 2013-08-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (99)

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https://mpra.ub.uni-muenchen.de/49889/1/MPRA_paper_49889.pdf original version (application/pdf)

Related works:
Journal Article: 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:pra:mprapa:49889

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