Grind or gamble? An experiment on effort and spread seeking in contests

Ola Andersson, Håkan J. Holm, Erik Wengström

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
Original languageEnglish
Peer-reviewed scientific journalEconomic Inquiry
Volume58
Issue number1
Pages (from-to)169-183
ISSN0095-2583
DOIs
Publication statusPublished - 01.2020
MoE publication typeA1 Journal article - refereed

Keywords

  • 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

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