Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/183378 
Year of Publication: 
2017
Series/Report no.: 
IFN Working Paper No. 1149
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We conduct a contest experiment where participants can invest in increasing both the mean and the spread of an uncertain performance variable. Subjects are treated with different prize schemes and in accordance with theory we observe substantial investments in spread. We find that both types of investments can be controlled with a three level prize scheme. However, the control is imperfect and behavior is characterized by inertia. The winner-take-all prize scheme has many disadvantages including high spread and heterogeneous behavior. The scheme where only one loser is punished appears superior; it generates high mean, low spread and is most popular.
Subjects: 
Contest
Risk
Spread
Incentives
Institutional Choice
Experiment
JEL: 
C7
D8
D02
D03
Document Type: 
Working Paper

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