An Experiment on Inequality within Groups in Contest

Mingye Ma () and Francesco Trevisan ()
Additional contact information
Mingye Ma: University of Southampton
Francesco Trevisan: Ca' Foscari University of Venice

No 2023: 30, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: We study Tullock contests allowing heterogeneity of both rewards and abilities within the competing groups. Our main concern is whether higher degrees of inequality in a group can improve its performance, namely group effort and probability of winning. First, we show that the answer to this question is positive under plausible conditions on players' cost function. Second, we test these predictions in the lab. Unlike theory predicts, inequality in abilities does not help a team win. Inequality in rewards does help but moderately. The efficient combination of both inequalities, which assigns high rewards to high ability players, substantially increases a team's performance. Finally, through the analysis of subjects' beliefs, we provide empirical evidence that overbidding is more severe than we expected.

Keywords: groups contests; inequality; optimal incentives; experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D72 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2023
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.unive.it/web/fileadmin/user_upload/dip ... a_trevisan_30_23.pdf First version, (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ven:wpaper:2023:30

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Venice "Ca' Foscari" Contact information at EDIRC.
Bibliographic data for series maintained by Sassano Sonia ().