Level-k models and overspending in contests
19 Pages Posted: 27 Nov 2016 Last revised: 20 Apr 2022
Date Written: October 9, 2017
Abstract
The experimental evidence on contests often reports significant overspending of subjects as opposed to the Nash equilibrium. We complement the existing explanations by providing a theoretical rationale for overspending which is based on the level-k model.
Keywords: Contest, Level-k reasoning
JEL Classification: C72, D72
Suggested Citation: Suggested Citation
Serena, Marco and Arve, Malin, Level-k models and overspending in contests (October 9, 2017). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2018-09, Available at SSRN: https://ssrn.com/abstract=2874894 or http://dx.doi.org/10.2139/ssrn.2874894
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