Hostname: page-component-7b9c58cd5d-7g5wt Total loading time: 0 Render date: 2025-03-17T06:20:08.688Z Has data issue: false hasContentIssue false
  • English
  • Français

Contests with revisions

Published online by Cambridge University Press:  14 March 2025

Emmanuel Dechenaux Open the ORCID record for Emmanuel Dechenaux [Opens in a new window]  and
Shakun D. Mago Open the ORCID record for Shakun D. Mago [Opens in a new window]
Emmanuel Dechenaux*
Affiliation:
Department of Economics, Kent State University, Kent, OH 44242-001, USA
Shakun D. Mago*
Affiliation:
Robins School of Business, University of Richmond, 1 Gateway Road, Richmond, VA 23173, USA
*
edechena@kent.edu
sdatta@richmond.edu
Get access Rights & Permissions [Opens in a new window]

Abstract

As informational leakages become a common occurrence in economic and business settings, the impact of observability on behavior in adversarial situations assumes increased importance. Consider a two-player contest where there is a probabilistic information leak about one player’s action and the recipient of the information has the ability to revise his contest expenditure in response to the leaked rival choice. How does the ability to revise and resubmit affect each contestant’s behavior? We design a laboratory experiment to study this question for two well-known contest games: the lottery contest and the all-pay auction. Equilibrium predicts that compared to simultaneous moves, the strategic asymmetry arising from the ability to revise has no effect on expected expenditure in the lottery contest. In contrast, in the all-pay auction expected expenditure is decreasing in the probability of informational leakage. Experimental data support these predictions despite overexpenditure relative to equilibrium. Furthermore, the potential observability of the rival’s action confers an advantage on the informed player not only in the all-pay auction, as theory predicts, but also in the lottery contest if the probability of leakage is high.

Keywords

ContestSequentialInformational leakageCommitmentFlexibility

JEL classification

C91: Laboratory, Individual Behavior D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 4 , September 2023 , pp. 915 - 954
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2023.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-023-09803-z.

References

Alon, N., Emek, Y., Feldman, M., & Tennenholtz, M. (2013). Adversarial Leakage in Games. SIAM Journal on Discrete Mathematics, 27, 363–385. 10.1137/110858021CrossRefGoogle Scholar
Amaldoss, W., Rapoport, A., & Columbus, F. (2009). Excessive expenditure in two-stage contests: Theory and experimental evidence. Game theory: Strategies, equilibria, and theorems, Nova Science Publishers.Google Scholar
Anderson, S. P., Goeree, J. K., & Holt, C. A. (1998). Rent seeking with bounded rationality: An analysis of the all-pay auction. Journal of Political Economy, 106, 828–853. 10.1086/250031CrossRefGoogle Scholar
Anderson, L. R., & Stafford, S. L. (2003). An experimental analysis of rent seeking under varying competitive conditions. Public Choice, 115, 199–216. 10.1023/A:1022817613815CrossRefGoogle Scholar
Babington, M., Goerg, S. J., & Kitchens, C. (2020). Do tournaments with superstars encourage or discourage competition?. Journal of Sports Economics, 21, 44–63. 10.1177/1527002519859405CrossRefGoogle Scholar
Baccara, M. (2007). Outsourcing, information leakage, and consulting firms. Rand Journal of Economics, 38, 269–289. 10.1111/j.1756-2171.2007.tb00055.xCrossRefGoogle Scholar
Bagwell, K. (1995). Commitment and observability in games. Games and Economic Behavior, 8, 271–280. 10.1016/S0899-8256(05)80001-6CrossRefGoogle Scholar
Balafoutas, L., Faravelli, M., & Sheremeta, R. M. (2021). Conflict in the pool: A field experiment, University of Innsbruck Mimeo.Google Scholar
Baye, M. R., Kovenock, D., & De Vries, C. G. (1996). The all-pay auction with complete information. Economic Theory, 8, 291–305. 10.1007/BF01211819CrossRefGoogle Scholar
Brandts, J., & Charness, G. (2011). The strategy versus the direct-response method: A survey of experimental comparisons. Experimental Economics, 14, 375–398. 10.1007/s10683-011-9272-xCrossRefGoogle Scholar
Brosig, J., Weimann, J., & Yang, C-L (2003). The hot versus cold effect in a simple bargaining experiment. Experimental Economics, 6, 75–90. 10.1023/A:1024204826499CrossRefGoogle Scholar
Brown, J. (2011). Quitters never win: The (Adverse) incentive effects of competing with superstars. Journal of Political Economy, 119, 982–1013. 10.1086/663306CrossRefGoogle Scholar
Brown, A., & Chowdhury, S. M. (2017). The hidden perils of affirmative action: Sabotage in handicap contests. Journal of Economic Behavior & Organization, 133, 273–284. 10.1016/j.jebo.2016.11.009CrossRefGoogle Scholar
Caruana, G., & Einav, L. (2008). A theory of endogenous commitment. Review of Economic Studies, 75, 99–116. 10.1111/j.1467-937X.2007.00470.xCrossRefGoogle Scholar
Chowdhury, S.M., Esteve-González, P., & Mukherjee, A. (2022). Heterogeneity, Leveling the Playing Field, and Affirmative Action in Contests. Southern Economic Journal, Forthcoming.Google Scholar
Chowdhury, S. M., Sheremeta, R. M., & Turocy, T. L. (2014). Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules. Games and Economic Behavior, 87, 224–238. 10.1016/j.geb.2014.05.004CrossRefGoogle Scholar
Cohen, C., & Shavit, T. (2012). Experimental tests of Tullock’s contest with and without winner refunds. Research in Economics, 66, 263–272. 10.1016/j.rie.2012.04.004CrossRefGoogle Scholar
Connolly, R. A., & Rendleman, R. J. Jr (2008). Skill, luck, and streaky play on the PGA Tour. Journal of the American Statistical Association, 103, 74–88. 10.1198/016214507000000310CrossRefGoogle Scholar
Corazzini, L., Faravelli, M., & Stanca, L. (2010). A prize to give for: An experiment on public good funding mechanisms. Economic Journal, 120, 944–967. 10.1111/j.1468-0297.2009.02314.xCrossRefGoogle Scholar
Davis, D., & Reilly, R. (1998). Do too many cooks always spoil the Stew? An experimental analysis of rent-seeking and the role of a strategic buyer. Public Choice, 95, 89–115. 10.1023/A:1004916624881CrossRefGoogle Scholar
Dechenaux, E., Kovenock, D., & Sheremeta, R. M. (2015). A survey of experimental research on contests, all-pay auctions and tournaments. Experimental Economics, 18, 609–669. 10.1007/s10683-014-9421-0CrossRefGoogle Scholar
Dixit, A. (1987). Strategic behavior in contests. American Economic Review, 77, 891–898.Google Scholar
Duffy, J., & Matros, A. (2021). All-pay auctions versus lotteries as provisional fixed-prize fundraising mechanisms: Theory and evidence. Journal of Economic Behavior & Organization, 192, 434–464. 10.1016/j.jebo.2021.10.010CrossRefGoogle Scholar
Ernst, C., & Thöni, C. (2013). Bimodal bidding in experimental all-pay auctions. Games, 4, 608–623. 10.3390/g4040608CrossRefGoogle Scholar
Fallucchi, F., Niederreiter, J., & Riccaboni, M. (2021). Learning and dropout in contests: An experimental approach. Theory and Decision, 90, 245–278. 10.1007/s11238-020-09783-zCrossRefGoogle Scholar
Fallucchi, F., Renner, E., & Sefton, M. (2013). Information feedback and contest structure in rent-seeking games. European Economic Review, 64, 223–240. 10.1016/j.euroecorev.2013.09.003CrossRefGoogle Scholar
Fang, H. (2002). Lottery versus all-pay auction models of lobbying. Public Choice, 112, 351–371. 10.1023/A:1019915126367CrossRefGoogle Scholar
Faravelli, M., & Stanca, L. (2014). Economic incentives and social preferences: Causal evidence of non-separability. Journal of Economic Behavior & Organization, 108, 273–289. 10.1016/j.jebo.2014.10.018CrossRefGoogle Scholar
Fehr, D., & Schmid, J. (2017). Exclusion in the all-pay auction: An experimental investigation. WZB Discussion Paper, No SP, II, 2017–202.Google Scholar
Fischbacher, U. (2007). z-Tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10, 171–178. 10.1007/s10683-006-9159-4CrossRefGoogle Scholar
Fonseca, M. (2009). An experimental investigation of asymmetric contests. International Journal of Industrial Organization, 27, 582–591. 10.1016/j.ijindorg.2009.01.004CrossRefGoogle Scholar
Franke, J. (2012). The incentive effects of leveling the playing field-an empirical analysis of Amateur Golf Tournaments. Applied Economics, 214, 1193–1200. 10.1080/00036846.2010.537646CrossRefGoogle Scholar
Fu, Q., & Wu, Z. (2022). Auctions versus Lottery All-Pay Contests: A General Dominance Theorem, National University of Singapore mimeo.Google Scholar
Gneezy, U., & Smorodinsky, R. (2006). All-Pay auctions—An experimental study. Journal of Economic Behavior & Organization, 61, 255–275. 10.1016/j.jebo.2004.09.013CrossRefGoogle Scholar
Greiner, B. (2015). Subject pool recruitment procedures: Organizing experiments with ORSEE. Journal of the Economic Science Association, 1, 114–125. 10.1007/s40881-015-0004-4CrossRefGoogle Scholar
Guryan, J., Kroft, K., & Notowidigdo, M. J. (2009). Peer effects in the workplace: Evidence from random groupings in professional Golf Tournaments. American Economic Journal: Applied Economics, 4, 34–68.Google Scholar
Hart, E., Avrahami, J., Kareev, Y., & Todd, P. M. (2015). Investing even in uneven contests: Effects of asymmetry on investment in contests. Journal of Behavioral Decision Making, 28, 395–409. 10.1002/bdm.1861CrossRefGoogle Scholar
Herrmann, B., & Orzen, H. (2008). The Appearance of Homo Rivalis: Social Preferences and the Nature of Rent Seeking, CeDEx Discussion Paper Series 2008–10.Google Scholar
Hirata, D. (2014). A model of a two-stage all-pay auction. Mathematical Social Sciences, 68, 5–13. 10.1016/j.mathsocsci.2013.12.002CrossRefGoogle Scholar
Huck, S., & Müller, W. (2000). Perfect versus imperfect observability–An experimental test of Bagwell’s Result. Games and Economic Behavior, 31, 174–190. 10.1006/game.1999.0746CrossRefGoogle Scholar
Hyndman, K., Ozbay, E. Y., & Sujarittanonta, P. (2012). Rent seeking with regretful agents: Theory and experiment. Journal of Economic Behavior & Organization, 84, 866–878. 10.1016/j.jebo.2012.10.007CrossRefGoogle Scholar
Jiang, Z. Z., Huang, Y., & Beil, D. R. (2022). The role of feedback in dynamic crowdsourcing contests: A structural empirical analysis. Management Science, 68, 4858–4877. 10.1287/mnsc.2021.4140CrossRefGoogle Scholar
Jian, L., Li, Z., & Liu, T. X. (2017). Simultaneous versus sequential all-pay auctions: An experimental study. Experimental Economics, 20, 648–669. 10.1007/s10683-016-9504-1CrossRefGoogle Scholar
Kamada, Y., & Kandori, M. (2020). Revision games. Econometrica, 88, 1599–1630. 10.3982/ECTA15272CrossRefGoogle Scholar
Kamada, Y., & Moroni, S. (2018). Games with Private Timing. University of Pittsburgh Working Paper No. 18/010.Google Scholar
Kimbrough, E. O., Sheremeta, R. M., & Shields, T. (2014). When parity promotes peace: Resolving conflict between asymmetric agents. Journal of Economic Behavior & Organization, 99, 96–108. 10.1016/j.jebo.2013.12.021CrossRefGoogle Scholar
Konrad, K. A. (2009). Strategy and Dynamics in Contests, Oxford University Press.CrossRefGoogle Scholar
Konrad, K. A., & Leininger, W. (2007). The generalized Stackelberg equilibrium of the all-pay auction with complete information. Review of Economic Design, 11, 165–174. 10.1007/s10058-007-0029-0CrossRefGoogle Scholar
Konrad, K. A., & Morath, F. (2020). Escalation in conflict games: On beliefs and selection. Experimental Economics, Experimental Economics, 23, 750–787. 10.1007/s10683-019-09630-1CrossRefGoogle Scholar
Lim, W., Matros, A., & Turocy, T. L. (2014). Bounded rationality and group size in Tullock contests: Experimental evidence. Journal of Economic Behavior & Organization, 99, 155–167. 10.1016/j.jebo.2013.12.010CrossRefGoogle Scholar
Liu, T. X. (2018). All-Pay auctions with endogenous bid timing: An experimental study. International Journal of Game Theory, 47, 247–271. 10.1007/s00182-017-0586-6CrossRefGoogle Scholar
Llorente-Saguer, A., Sheremeta, R. M., & Szech, N. (2022). Designing contests between heterogeneous contestants: An experimental study of tie-breaks and bid-caps in all-pay auction. European Economic Review, 124, 104327.Google Scholar
Lugovskyy, V., Puzzello, D., & Tucker, S. (2010). An experimental investigation of overdissipation in the all-pay auction. European Economic Review, 54, 974–997. 10.1016/j.euroecorev.2010.02.006CrossRefGoogle Scholar
Mago, S. D., & Razzolini, L. (2019). Best-of-five contest: An experiment on gender differences. Journal of Economic Behavior & Organization, 162, 164–187. 10.1016/j.jebo.2019.04.015CrossRefGoogle Scholar
Mago, S. D., Samak, A. C., & Sheremeta, R. M. (2016). Facing your opponents: Social identification and information feedback in contests. Journal of Conflict Resolution, 60, 459–481. 10.1177/0022002714545333CrossRefGoogle Scholar
Mago, S. D., & Sheremeta, R. M. (2019). New Hampshire effect: Behavior in sequential and simultaneous multi-battle contests. Experimental Economics, 22, 325–349. 10.1007/s10683-018-9569-0CrossRefGoogle Scholar
Mago, S. D., Sheremeta, R. M., & Yates, A. (2013). Best-of-three contest experiments: Strategic versus psychological momentum. International Journal of Industrial Organization, 31, 287–296. 10.1016/j.ijindorg.2012.11.006CrossRefGoogle Scholar
Matros, A., & Armanios, D. (2009). Tullock’s contest with reimbursements. Public Choice, 141, 49–63. 10.1007/s11127-009-9436-9CrossRefGoogle Scholar
Matsui, A. (1989). Information leakage forces cooperation. Games and Economic Behavior, 1, 94–115. 10.1016/0899-8256(89)90007-9CrossRefGoogle Scholar
Morgan, J., & Várdy, F. (2004). An experimental study of commitment and observability in Stackelberg games. Games and Economic Behavior, 49, 401–423. 10.1016/j.geb.2004.04.005CrossRefGoogle Scholar
Morgan, J., & Várdy, F. (2007). The value of commitment in contests and tournaments when observation is costly. Games and Economic Behavior, 60, 326–338. 10.1016/j.geb.2006.10.009CrossRefGoogle Scholar
Morgan, J., & Várdy, F. (2013). The fragility of commitment. Management Science, 59, 1344–1353. 10.1287/mnsc.1120.1639CrossRefGoogle Scholar
Nelson, A., & Ryvkin, D. (2019). Contests with Sequential Moves: An Experimental Study. Florida State University Working Paper No. wp2019_11_01.Google Scholar
Orzen, H. (2008). Fundraising through competition: Evidence from the lab, No: CeDEx Discussion Paper Series 2008–11.Google Scholar
Parco, J., Rapoport, A., & Amaldoss, W. (2005). Two-stage contests with budget constraints: An experimental study. Journal of Mathematical Psychology, 49, 320–338. 10.1016/j.jmp.2005.03.002CrossRefGoogle Scholar
Schmitt, P., Shupp, R., Swope, K., & Cadigan, J. (2004). Multi-period rent-seeking contests with carryover: Theory and experimental evidence. Economics of Governance, 5, 187–211. 10.1007/s10101-004-0075-9CrossRefGoogle Scholar
Schram, A. J., & Onderstal, S. (2009). Bidding to give: An experimental comparison of auctions for charity. International Economic Review, 50, 431–457. 10.1111/j.1468-2354.2009.00536.xCrossRefGoogle Scholar
Selten, R. (1998). Features of experimentally observed bounded rationality. European Economic Review, 42, 413–436. 10.1016/S0014-2921(97)00148-7CrossRefGoogle Scholar
Sheremeta, R. M. (2018). Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests. Economic Science Institute Working Paper, Chapman University.Google Scholar
Sheremeta, R. M. (2010). Experimental comparison of multi-stage and one-stage contests. Games and Economic Behavior, 68, 731–747. 10.1016/j.geb.2009.08.001CrossRefGoogle Scholar
Sheremeta, R. M. (2011). Contest design: An experimental investigation. Economic Inquiry, 49, 573–590. 10.1111/j.1465-7295.2009.00274.xCrossRefGoogle Scholar
Sheremeta, R. M. (2013). Overbidding and heterogeneous behavior in contest experiments. Journal of Economic Surveys, 27, 491–514. 10.1111/joes.12022CrossRefGoogle Scholar
Shogren, J. F., & Baik, K. H. (1992). Favorites and underdogs: Strategic behavior in an experimental contest. Public Choice, 74, 191–205. 10.1007/BF00140767CrossRefGoogle Scholar
Shupp, R., Sheremeta, R. M., Schmidt, D., & Walker, J. (2013). Resource allocation contests: Experimental evidence. Journal of Economic Psychology, 39, 257–267. 10.1016/j.joep.2013.09.001CrossRefGoogle Scholar
Solan, E., & Yariv, L. (2004). Games with Espionage. Games and Economic Behavior, 47, 172–199. 10.1016/S0899-8256(03)00177-5CrossRefGoogle Scholar
Sunde, U. (2009). Heterogeneity and performance in tournaments: A test for incentive effects using professional tennis data. Applied Economics, 41, 3199–3208. 10.1080/00036840802243789CrossRefGoogle Scholar
Tullock, G. Buchanan, J. M., Tollison, R. D., & Tullock, G. (1980). Efficient rent seeking. Toward a theory of the rent-seeking society, Texas A &M University Press 97–112.Google Scholar
van Damme, E., & Hurkens, S. (1997). Games with imperfectly observable commitment. Games and Economic Behavior, 21, 282–308. 10.1006/game.1997.0524CrossRefGoogle Scholar
Várdy, F. (2004). The Value of commitment in Stackelberg games with observation costs. Games and Economic Behavior, 49, 374–400. 10.1016/j.geb.2003.07.003CrossRefGoogle Scholar
Vojnovic, M. (2016). Contest theory: Incentive mechanisms and ranking methods, Cambridge University Press.Google Scholar
Weimann, J., Yang, C. L., & Vogt, C. (2000). An experiment on sequential rent seeking. Journal of Economic Behavior & Organization, 41, 405–426. 10.1016/S0167-2681(99)00083-9CrossRefGoogle Scholar
Yildirim, H. (2005). Contests with multiple rounds. Games and Economic Behavior, 51, 213–227. 10.1016/j.geb.2004.03.004CrossRefGoogle Scholar
Zizzo, D. J. (2003). Money burning and rank egalitarianism with random dictators. Economics Letters, 81, 263–266. 10.1016/S0165-1765(03)00190-3CrossRefGoogle Scholar
Supplementary material: File

Dechenaux and Mago supplementary material

Appendices A-C
Download Dechenaux and Mago supplementary material(File)
File 1.5 MB