Erik Wengström

Studierektor forskarutbildning, Nationalekonomiska institutionen, Professor

Grind or Gamble? : An Experimental Analysis of Effort and Spread Seeking in Contests

Författare

Ola Andersson
Håkan J. Holm
Erik Wengström

Summary, in English

We conduct a contest experiment where participants can invest in increasing both the mean and the spread of an uncertain performance variable. Subjects are treated with different prize schemes and in accordance with theory we observe substantial investments in spread. We find that both types of investments can be controlled with a three level prize scheme. However, the control is imperfect and behavior is characterized by inertia. The winner-take-all prize scheme has many disadvantages including high spread and heterogeneous behavior. The scheme where only one loser is punished appears superior; it generates high mean, low spread and is most popular.

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