Mis-Judging Merit: The Effects of Adjudication Errors in Contests

51 Pages Posted: 17 Jul 2016

See all articles by Astrid Gamba

Astrid Gamba

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: July 15, 2016

Abstract

Adjudication errors in contests have a dual nature: they imply at the same time the unjust exclusion of a meritorious candidate (exclusion error) and the unjust inclusion of a non-meritorious one (inclusion error). We study theoretically and experimentally the effects of adjudication errors on contestants’ effort, explicitly disentangling the respective effects of exclusion and inclusion errors. We show how behavioral aspects, such as risk aversion, loss aversion and the framing of the incentive scheme (prize vs. penalty) shape the effects of judgement errors on effort. The experimental findings indicate that misjudgements negatively affect bids, with exclusion and inclusion errors contributing equally to the disincentive effects of adjudication errors. A penalty framing significantly increases bids, relative to a prize framing, both in the absence of judgement errors and in the presence of adjudication errors. On the other hand, no significant interaction is found between the framing of the incentive scheme and the disincentive effects of judgement errors.

Keywords: adjudication errors; contests; all-pay auction; experiment

JEL Classification: C72, C91, D44

Suggested Citation

Gamba, Astrid and Stanca, Luca, Mis-Judging Merit: The Effects of Adjudication Errors in Contests (July 15, 2016). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 345. Available at SSRN: https://ssrn.com/abstract=2810045 or http://dx.doi.org/10.2139/ssrn.2810045

Astrid Gamba

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Luca Stanca (Contact Author)

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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