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Mis-judging merit: the effects of adjudication errors in contests

Published online by Cambridge University Press:  14 March 2025

Astrid Gamba Open the ORCID record for Astrid Gamba [Opens in a new window]  and
Luca Stanca
Astrid Gamba*
Affiliation:
Department of Economics, University of Insubria, Via Monte Generoso 71, 21100 Varese, Italy
Luca Stanca
Affiliation:
Department of Economics Management and Statistics, and NeuroMI, University of Milan-Bicocca, Piazza dell’Ateneo Nuovo 1, 20126 Milan, Italy
*
astrid.gamba@uninsubria.it
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Abstract

Within contests, adjudication errors imply at the same time the exclusion of a meritorious candidate and the inclusion of a non-meritorious one. We study theoretically how adjudication errors affect bids in all-pay auctions, by disentangling the respective effects of exclusion and inclusion errors, and showing how they interact with the framing of incentives (prize or penalty) under different assumptions on preferences. We test our theoretical predictions with an experiment where we manipulate the presence of exclusion errors, inclusion errors, and the framing of incentives. The experimental evidence indicates that errors of either exclusion or inclusion significantly decrease bids in all-pay auctions relative to a setting without errors, interacting negatively, with no significant difference in the size of their effects. Bid levels are significantly higher in a penalty framing relative to a prize framing, both in the absence of errors and in the presence of adjudication errors.

Keywords

Adjudication errorsContestsAll-pay auctionExperiment

JEL classification

D44: Auctions C91: Laboratory, Individual Behavior C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 3 , July 2023 , pp. 550 - 587
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2022.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-022-09785-4.

The replication material for the study is available at https://doi.org/10.3886/E182901V3.

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