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Publication Details

19 Jul 17

Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes.

Authors: FALLUCCHI Francesco, RAMALINGAM Abhijit.

Abstract: We study the effects of different sources of inequality in a commonplace economic interaction: competition. We investigate how individuals react to different types of inequality in experimental two-player Tullock contests where contestants expend resources to win a prize. We study three different sources of inequality: resources, abilities and possible outcomes. We find that overall competitive effort is greater in the presence of inequality in abilities than other inequalities. Unlike other forms, inequality in abilities elicits a very aggressive reaction from disadvantaged players relative to their advantaged opponents. The Quantal Response Equilibrium (QRE) suggests that financial incentives are less salient in the presence of a biased contest procedure.

Reference: FALLUCCHI Francesco, RAMALINGAM Abhijit. Inequality and Competitive Effort: The Roles of Asymmetric Resources, Opportunity and Outcomes. LISER, 2017, Working Papers n°2017-12, 60 p.

Keywords:
rent seeking,
contest,
experiment,
inequality,
inequity,
Quantal Response Equilibrium

JEL: C91, C92, D31, D63, J78.

Project: LISER-LAB

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