Journal
EXPERIMENTAL ECONOMICS
Volume 24, Issue 2, Pages 669-697Publisher
SPRINGER
DOI: 10.1007/s10683-020-09677-5
Keywords
Contests; Groups; Abilities; Heterogeneity; Experiments
Categories
Funding
- ESRC [ES/K002201/1] Funding Source: UKRI
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Competition between groups that are not created equal intensifies conflict and increases volatility, leading to reduced earnings for contest participants and increased inequality. Heterogeneous groups share labor more equally than predicted by theory, and in asymmetric contests, group members change how they condition their efforts on those of their peers.
Competition between groups is ubiquitous in social and economic life, and typically occurs between groups that are not created equal. Here we experimentally investigate the implications of this general observation on the unfolding of symmetric and asymmetric competition between groups that are either homogeneous or heterogeneous in the ability of their members to contribute to the success of the group. Our main finding is that relative to the benchmark case in which two homogeneous compete against each other, heterogeneity within groups per se has no discernable effect on competition, while introducing heterogeneity between groups leads to a significant intensification of conflict as well as increased volatility, thereby reducing earnings of contest participants and increasing inequality. We further find that heterogeneous groups share the labor much more equally than predicted by theory, and that in asymmetric contests group members change the way in which they condition their efforts on those of their peers. Implications for contest designers are discussed.
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