That\u2019s the ticket: explicit lottery randomisation and learning in Tullock contests

Subhasish M Chowdhury,Anwesha Mukherjee,Theodore L Turocy

doi:10.1007/s11238-019-09731-6

Abstract

Most laboratory experiments studying Tullock contest games find that bids significantly exceed the risk-neutral equilibrium predictions. We test the generalisability of these results by comparing a typical experimental implementation of a contest against the familiar institution of a ticket-based raffle. We find that in the raffle (1) initial bid levels are significantly lower and (2) bids adjust more rapidly towards expected-earnings best responses. We demonstrate the robustness of our results by replicating them across two continents at two university labs with contrasting student profiles.

Highlights

There is an active literature studying contest games using laboratory experiments (Dechenaux et al 2015)
We present the formal description of the Tullock contest game and our experimental design in Sect
We provide a first investigation into bidding in implementations of a Tullock contest which are equivalent under standard theoretical assumptions

Summary

Introduction

There is an active literature studying contest games using laboratory experiments (Dechenaux et al 2015). In the typical implementation of a raffle, people purchase individually numbered tickets, which are collected in a container of some sort. 3 We design a treatment in which we describe the game in the instructions, and carry it out in the implementation, using the common terminology associated with the raffle. The Tullock CSF is commonly written in ratio form. This custom carries over to the writing of experimental instructions. A majority of studies do present this ratio, with many, including Fallucchi et al (2013), Ke et al (2013), and Lim et al (2014) explicitly using a displayed mathematical formula similar to (1). 5

Methods

Results

Conclusion