Erik Wengström

Studierektor forskarutbildning, Nationalekonomiska institutionen, Professor

GRIND OR GAMBLE? AN EXPERIMENT ON EFFORT AND SPREAD SEEKING IN CONTESTS

Författare

Ola Andersson
Håkan J. Holm
Erik Wengström

Summary, in English

We conduct a contest experiment to study if spread seeking and effort can be managed when 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 higher investments in spread for the winner-take-all scheme. Both types of investments can be controlled with a three-level prize scheme. However, the control management is imperfect and behavior is characterized by inertia. We also explore the correlation between effort and spread across subjects and find that is robustly positive.

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