Who Pays to Win Again? The Joy of Winning in Contest Experiments

32 Pages Posted: 21 Apr 2016

See all articles by Luisa Herbst

Luisa Herbst

Max Planck Institute for Tax Law and Public Finance

Date Written: April 19, 2016

Abstract

In contest experiments, overbidding is a widely observed phenomenon. One common explanation for overbidding is that winning in itself yields utility, termed the joy of winning. However, the joy of winning is difficult to observe and to quantify. This paper develops a novel, incentivized way to measure the individual-specific joy of winning as well as the frustration of losing in a Tullock lottery contest. We find that the willingness to pay for a restart of the contest differs between winners and losers. Compared to a theoretical benchmark, winners are more satisfied and overbid for restart of the contest, while losers are less satisfied and underbid. Further, effort levels are higher in the second contest, which can be explained by selection of high effort types with a high joy of winning into the restarted contest.

Keywords: Bidding, contest, desire to win, effort, experiment, emotions, joy of winning, love of winning, overexpenditure

JEL Classification: C78, C91, D72, D74

Suggested Citation

Herbst, Luisa, Who Pays to Win Again? The Joy of Winning in Contest Experiments (April 19, 2016). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2016-6, Available at SSRN: https://ssrn.com/abstract=2766934 or http://dx.doi.org/10.2139/ssrn.2766934

Luisa Herbst (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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