Seminar: Roman Shreremeta, Department of Economics, Purdue University, Indiana, US.

Title: Perfect-Substitutes, Best-Shot, and Weakest-Link Contests between Groups.

Abstract:

This paper experimentally studies different lottery contests between two groups. Each group has two types of players – one strong player with a higher valuation for the prize and two weak players with lower valuations. The results indicate that individual behavior depends upon a player’s type and the contest rule. In contests where individual efforts are perfect substitutes, both strong and weak players expend significantly higher efforts than predicted by theory. In best-shot contests, where group performance depends on the best performer within the group, most of the effort is expended by strong players while weak players free-ride. In weakest-link contests, where group performance depends on the worst performer within the group, there is almost no free-riding and all players expend similar positive efforts. As a result, perfect-substitutes contests generate the highest group effort among all contests, weakest-link contests generate the lowest free-riding, and best-shot contests generate the highest relative effort by strong players