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Overbidding and heterogeneous behavior in contest experiments:A meta-comment on cross-cultural differences

Author

Listed:
  • Chowdhury, Subhasish M.
  • Marini, Matteo M.
Abstract
We revisit the analyses by Sheremeta (2013) and Chowdhury and Moffatt (2017), who pool experimental data from 30 Tullock contests to explain the phenomenon of overbidding. The authors find that the overbidding rate is positively related to the number of contestants and has an inverted U-shaped relationship with the relative endowment. We reuse their data and extend the analysis in the direction of cross-cultural differences, focusing on ethno-linguistic-religious fractionalization as a country-level measure. The results suggest an increased explanatory power of the model, with fractionalization negatively relating to overbidding. In addition, the extended model shows that in the one-shot game the overbidding rate is significantly higher than in the case of repeated interactions. We discuss possible interpretations of our findings.

Suggested Citation

  • Chowdhury, Subhasish M. & Marini, Matteo M., 2024. "Overbidding and heterogeneous behavior in contest experiments:A meta-comment on cross-cultural differences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 110(C).
    • Handle: RePEc:eee:soceco:v:110:y:2024:i:c:s221480432400048x
    DOI: 10.1016/j.socec.2024.102210
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    as
    1. Subhasish M. Chowdhury & Dan Kovenock & Anwesha Mukherjee, 2024. "Experimental Research on Contests," Working Papers 2024004, The University of Sheffield, Department of Economics.
    2. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2021. "Group size and matching protocol in contests," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(4), pages 1716-1736, November.
    3. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    4. Joan Esteban & Debraj Ray, 2008. "Polarization, Fractionalization and Conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 45(2), pages 163-182, March.
    5. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2020. "The effects of conflict budget on the intensity of conflict: an experimental investigation," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 240-258, March.
    6. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-573, October.
    7. Chowdhury, Subhasish M. & Sheremeta, Roman M. & Turocy, Theodore L., 2014. "Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules," Games and Economic Behavior, Elsevier, vol. 87(C), pages 224-238.
    8. Sheremeta, Roman M., 2010. "Experimental comparison of multi-stage and one-stage contests," Games and Economic Behavior, Elsevier, vol. 68(2), pages 731-747, March.
    9. Subhasish M. Chowdhury & Peter G. Moffatt, 2017. "Overbidding And Heterogeneous Behavior In Contest Experiments: A Comment On The Endowment Effect," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 572-576, April.
    10. Szidarovszky, Ferenc & Okuguchi, Koji, 1997. "On the Existence and Uniqueness of Pure Nash Equilibrium in Rent-Seeking Games," Games and Economic Behavior, Elsevier, vol. 18(1), pages 135-140, January.
    11. Chowdhury, Subhasish M. & Sheremeta, Roman M., 2011. "Multiple equilibria in Tullock contests," Economics Letters, Elsevier, vol. 112(2), pages 216-219, August.
    12. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
    13. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    14. Roman M. Sheremeta, 2011. "Contest Design: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 573-590, April.
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    17. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    18. Joan Esteban & Laura Mayoral & Debraj Ray, 2012. "Ethnicity and Conflict: An Empirical Study," American Economic Review, American Economic Association, vol. 102(4), pages 1310-1342, June.
    19. Roman M. Sheremeta, 2013. "Overbidding And Heterogeneous Behavior In Contest Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 491-514, July.
    20. Marini, Matteo M., 2022. "Does gender moderate the influence of emotions on risk-taking? The meta-analysis reloaded," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).
    21. Roman M. Sheremeta, 2018. "Behavior In Group Contests: A Review Of Experimental Research," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 683-704, July.
    22. Matteo M. Marini & Giulia Ulivieri, 2024. "Meta-analyses in Economic Psychology: A sustainable approach to cross-cultural differences," MUNI ECON Working Papers 2024-01, Masaryk University.
    23. Lim, Wooyoung & Matros, Alexander & Turocy, Theodore L., 2014. "Bounded rationality and group size in Tullock contests: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 155-167.
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    More about this item

    Keywords

    Meta-analysis; Contests; Experiments; Overbidding; Fractionalization;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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