Best-of-Three Contests: Experimental Evidence
35 Pages Posted: 24 Sep 2011
Date Written: May 5, 2011
We conduct an experimental analysis of a best-of-three Tullock contest. Intermediate prizes lead to higher efforts, while increasing the role of luck (as opposed to effort) leads to lower efforts. Both intermediate prizes and luck reduce the probability of contest ending in two rounds. The patterns of players’ efforts and the probability that a contest ends in two rounds is consistent with “strategic momentum,” i.e. momentum generated due to strategic incentives inherent in the contest. We do not find evidence for “psychological momentum,” i.e. momentum which emerges when winning affects player's confidence. Similar to previous studies of contests, we find significantly higher efforts than predicted and strong heterogeneity in effort between subjects.
Keywords: best-of-three contest, experiments, strategic momentum, psychological momentum
JEL Classification: C72, C91, D72
Suggested Citation: Suggested Citation