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Resource Allocation Contests: Experimental Evidence

Resource Allocation Contests: Experimental Evidence

Paperback

General Science

ISBN10: 1502738953
ISBN13: 9781502738950
Publisher: Createspace
Published: Oct 7 2014
Pages: 32
Weight: 0.22
Height: 0.07 Width: 8.50 Depth: 11.02
Language: English
Across many forms of rent seeking contests, the impact of risk aversion on equilibrium play is indeterminate. We design an experiment to compare individuals' decisions across three contests which are isomorphic under risk-neutrality, but are typically not isomorphic under other risk preferences. The pattern of individual play across our contests is not consistent with a Bayes-Nash equilibrium for any distribution of risk preferences. We show that replacing the Bayes-Nash equilibrium concept with the quintal response equilibrium, along with heterogeneous risk preferences can produce equilibrium patterns of play that are very similar to the patterns we observe.

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General Science