Bounded rationality and group size in Tullock contests:experimental evidence

Lim, Wooyoung and Matros, Alexander and Turocy, Ted (2014) Bounded rationality and group size in Tullock contests:experimental evidence. Journal of Economic Behavior and Organization, 99. pp. 155-167. ISSN 0167-2681

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Abstract

We explore how models of boundedly rational decision-making in games can explain the overdissipation of rents in laboratory Tullock contest games. Using a new series of experiments in which group size is varied across sessions, we find that models based on logit choice organize the data well. In this setting, logit quantal response equilibrium (QRE) is a limit of a cognitive hierarchy (CH) model with logit best responses for appropriate parameters. While QRE captures the data well, the CH fits provide support for relaxing the equilibrium assumption. Both the QRE and CH models have parameters which capture boundedness of rationality. The maximum likelihood fits of both models yield parameters indicating rationality is more restricted as group size grows. Period-by-period adjustments of expenditures are more likely to be in the earnings-improving direction in smaller groups.

Item Type:
Journal Article
Journal or Publication Title:
Journal of Economic Behavior and Organization
Additional Information:
This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
70814
Deposited By:
Deposited On:
16 Sep 2014 23:06
Refereed?:
Yes
Published?:
Published
Last Modified:
29 Sep 2020 02:02