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Excess Entry in an Experimental Winner-Take-All Market

Fischbacher, Urs; Thöni, Christian (2002). Excess Entry in an Experimental Winner-Take-All Market. Working paper series / Institute for Empirical Research in Economics No. 86, University of Zurich.

Abstract

"""Winner-Take-All""-markets, i.e. markets in which the relative and not the absolute performance is decisive, have gained in importance. Such markets have a tendency to provoke inefficiently many entries. We investigate the functioning of such markets with the help of experiments and show that there are even more inefficient entries than predicted by the Nash equilibrium. Moreover, this effect increases with group size. Quantal response equilibrium predicts the increase in group size but fails to predict the excess entry in the smaller group. We show that the excess entry is not caused by coordination failures. Furthermore, individual entry behavior is not significantly linked to risk preferences. We discuss several concepts that might explain the observed excess entry."

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:January 2002
Deposited On:29 Nov 2011 21:26
Last Modified:08 Mar 2024 13:51
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
OA Status:Green
Other Identification Number:merlin-id:5755

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