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Winner-take-all and proportional-prize contests: Theory and experimental results

Published on Feb 1, 2018in Journal of Economic Behavior and Organization1.40
· DOI :10.1016/j.jebo.2018.01.023
Timothy N. Cason35
Estimated H-index: 35
(Purdue University),
William A. Masters23
Estimated H-index: 23
(Tufts University),
Roman M. Sheremeta34
Estimated H-index: 34
(Case Western Reserve University)
Abstract
Abstract This study provides a unified framework to compare three canonical types of contests: winner-take-all contests won by the best performer, winner-take-all lotteries where probability of success is proportional to performance, and proportional-prize contests in which rewards are shared in proportion to performance. We derive equilibria and observe outcomes from each contest in a laboratory experiment. Equilibrium and observed efforts are highest in winner-take-all contests. Lotteries and proportional-prize contests have the same Nash equilibrium, but empirically, lotteries induce higher efforts and lower, more unequal payoffs. Behavioral deviations from theoretical benchmarks in different contests are caused by the same underlying attributes, such as risk-aversion and the utility of winning. Finally, we find that subjects exhibit consistent behavior across different types of contests, with subjects exerting higher effort in one contest also exerting higher effort in another contest.
  • References (74)
  • Citations (3)
References74
Newest
#1Timothy N. Cason (Purdue University)H-Index: 35
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
Last.Jingjing Zhang (UTS: University of Technology, Sydney)H-Index: 8
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9 CitationsSource
#1Prakarsh Singh (Amherst College)H-Index: 5
#2William A. Masters (Tufts University)H-Index: 23
3 CitationsSource
#1Erik O. Kimbroughy (SFU: Simon Fraser University)H-Index: 14
#2Kevin Laughren (SFU: Simon Fraser University)H-Index: 1
Last.Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
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11 CitationsSource
#1Shakun D. Mago (UR: University of Richmond)H-Index: 9
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
44 CitationsSource
#1John Morgan (University of California, Berkeley)H-Index: 37
#2Henrik Orzen (UMA: University of Mannheim)H-Index: 13
Last.Dana Sisak (EUR: Erasmus University Rotterdam)H-Index: 5
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17 CitationsSource
#1Shakun D. Mago (UR: University of Richmond)H-Index: 9
#2Anya Savikhin (UW: University of Wisconsin-Madison)H-Index: 15
Last.Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
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25 CitationsSource
#1Jared Rubin (Chapman University)H-Index: 13
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
30 CitationsSource
#1Emmanuel Dechenaux (KSU: Kent State University)H-Index: 10
#2Dan Kovenock (Chapman University)H-Index: 30
Last.Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
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336 CitationsSource
#1Curtis R. Price (USI: University of Southern Indiana)H-Index: 5
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
68 CitationsSource
#1Subhasish M. Chowdhury (UEA: University of East Anglia)H-Index: 11
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
14 CitationsSource
Cited By3
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#1Michael Majerczyk (J. Mack Robinson College of Business)H-Index: 1
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
Last.Yu Tian (UCF: University of Central Florida)H-Index: 1
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1 CitationsSource
#1Shakun D. Mago (UR: University of Richmond)H-Index: 9
#2Roman M. Sheremeta (Case Western Reserve University)H-Index: 34
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