We conduct a contest experiment to study if spread seeking and effort can be managed when participants can invest in increasing both the mean and the spread of an uncertain performance variable. Subjects are treated with different prize schemes and in accordance with theory, we observe higher investments in spread for the winner‐take‐all scheme. Both types of investments can be controlled with a three‐level prize scheme. However, the control management is imperfect and behavior is characterized by inertia. We also explore the correlation between effort and spread across subjects and find that is robustly positive.
- 511 Economics
Areas of Strength and Areas of High Potential (AoS and AoHP)
- AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics