That's the Ticket: Explicit Lottery Randomisation and Learning in Tullock Contests

Abstract

We experimentally contrast mathematical versus operational explanations of Tullock lottery contests. We contrast a protocol explaining the contest in terms of probability of winning, with an operational approach that carries out the random component of the contest as an explicit lottery each period. Initial expenditure levels are significantly lower when using the operational approach. In addition, using the operational approach, groups far from equilibrium in a given period move more rapidly towards approximate mutual best response. We find these results in sessions conducted in the UK and in the US. The implications that can be drawn from experiments on contest games therefore depend on the approach used to present the game to the players.

Keywords: lottery contest, learning, framing, experiment

JEL Classification: C72, C91, D72, D83