Behavioral Dimensions of Contests

Roman Sheremeta ()

MPRA Paper from University Library of Munich, Germany

Abstract: The standard theoretical description of rent-seeking contests is that of rational individuals or groups engaging in socially inefficient behavior by exerting costly effort. Experimental studies find that the actual efforts of participants are significantly higher than predicted in the models based on rational behavior and that over-dissipation of rents (or overbidding or over-expenditure of resources) can occur. Although over-dissipation cannot be explained by the standard rational-behavior theory, it can be explained by incorporating behavioral dimensions into the standard model, such as (1) the utility of winning, (2) relative payoff maximization, (3) bounded rationality, and (4) judgmental biases. These explanations are not exhaustive but provide a coherent picture of important behavioral dimensions to be considered when studying rent-seeking behavior in theory and in practice.

Keywords: rent-seeking; contests; experiments; overbidding; over-dissipation (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D72 D74 (search for similar items in EconPapers)
Date: 2014-08-04
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-hpe and nep-upt
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Related works:
Working Paper: Behavioral Dimensions of Contests (2014)
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