Research

Simultaneous Decision-Making in Competitive and Cooperative Games

Authors

Published

Economic Inquiry, vol. 51, pp. 1311-1323, 2013

Website

http://ideas.repec.org/p/chu/wpaper/10-09.html

Abstract

We experimentally investigate simultaneous decision-making in two contrasting environments: a competitive environment (a contest) and a cooperative environment (a voluntary contribution mechanism). We find that the cooperative nature of the voluntary contribution mechanism spills over to the contest, decreasing sub-optimal overbidding in the contest. However, contributions to the public good are not affected by simultaneous participation in the contest. There is a significant negative correlation between decisions made in competitive and cooperative environments, i.e. more cooperative subjects tend to be less competitive and vice versa. This correlation can be rationalized by heterogeneous social preferences towards inequality but not by bounded rationality theory.

Roman Sheremeta