Level-K Models Rationalize Overspending in Contests
19 Pages Posted: 27 Nov 2016 Last revised: 4 Oct 2018
Date Written: October 9, 2017
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