Thursday, December 10, 2020 12:00 PM to 1:30 PM
Online Location, Zoom Meeting
The Interdisciplinary Center for Economic Science (ICES) presents an ICES Brown Bag Lecture featuring:
George Mason University
Asymmetric Shocks in Contests: Theory and Experiment
Please contact ICES Office Manager (firstname.lastname@example.org) for Zoom link.
Under optimal tournament design, we would expect agents to exert same efforts regardless of the shape of the contest function’s error component. We report data from laboratory experiments that provide a first test of this prediction. We find that efforts do not significantly differ when the shock distribution exhibits negative skewness versus a uniform distribution. However, subjects react substantially differently to random shock realizations under different treatments. Specifically, tournament winners demonstrate stronger reactions, economically and statistically, to negatively-skewed shocks than to uniform shocks. Meanwhile, tournament losers are less likely to be affected by negatively-skewed shocks. Our results highlight the importance of accounting for the influence of the shape of the shock distribution on a contest participant’s effort.
For more information about the Brown Bag Lectures, please visit the Brown Bag Schedule homepage.