Why Beating the Expected Best is a Bad Idea
2016 (English)Report (Other academic)
Overconfidence is a well-documented phenomenon in economic game experiments. This paper modifies the standard Tullock contest by introducing a feasible heuristic which consists of the probability of beating the expected best outcome of the opponent. This new Fixed Expectation Contest Success Function (FE-CSF) is compared to Tullock’s CSF and shown to lead to overconfidence and over-expenditure of resources, from the contestant’s point of view.
Place, publisher, year, edition, pages
2016. , 18 p.
Umeå economic studies, ISSN 0348-1018 ; 936
delegated search, principal-agent, matching, incentives, simultaneous, contest success function, overconfidence
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-124590OAI: oai:DiVA.org:umu-124590DiVA: diva2:953315