Overbidding and Heterogeneous Behavior in Contest Experiments: A Comment on the Endowment Effect

5 Pages Posted: 28 May 2020

See all articles by Subhasish M. Chowdhury

Subhasish M. Chowdhury

University of Bath - Department of Economics

Peter G. Moffatt

University of East Anglia (UEA) - School of Economic and Social Studies

Date Written: April 2017

Abstract

We revisit the meta‐analysis of Sheremeta on overbidding in contest experiments and focus on the effect of endowment on overbidding. Sheremeta assumes, and finds evidence of, an increasing linear relationship between endowment and overbidding, Quantal Response Equilibrium (QRE) predicts an increasing concave relationship, while Baik and colleagues find an inverted U‐shaped relationship in their analysis of a single experiment. We use the same data as in Sheremeta, but employ a different econometric model which leads to support for both QRE and the inverted U‐shaped relationship. Following Baik and colleagues, we posit that the inverted‐U relationship may be interpreted in terms of a wealth effect.

Keywords: Contests, Endowment, Experiments, Meta‐analysis, Overbidding

Suggested Citation

Chowdhury, Subhasish M. and Moffatt, Peter G., Overbidding and Heterogeneous Behavior in Contest Experiments: A Comment on the Endowment Effect (April 2017). Journal of Economic Surveys, Vol. 31, Issue 2, pp. 572-576, 2017, Available at SSRN: https://ssrn.com/abstract=3608895 or http://dx.doi.org/10.1111/joes.12152

Subhasish M. Chowdhury (Contact Author)

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

HOME PAGE: http://https://sites.google.com/site/subhasishmc/

Peter G. Moffatt

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
35
PlumX Metrics