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Research output: Working paper
Research output: Working paper
}
TY - UNPB
T1 - The Grant Proposal Game
T2 - An Experimental Study on Herding and Divergent Behaviors in Competition
AU - Mugerman, Yevgeny
AU - Winter, Eyal
AU - Yafeh, Tomer
PY - 2025/5/12
Y1 - 2025/5/12
N2 - We explore strategic betting in competitive environments with multiple participants and potential winners. We examine two scenarios: an “inclusive” low-competition scenario with many winners and an “exclusive” high-competition scenario with few winners. Using a simple model, we illustrate the strategic insights in these scenarios and present experimental results that align with our predictions. In the experiment, participants made repeated bets with feedback on past results and their payoffs. In the inclusive scenario, all but the worst guessers were rewarded, while in the exclusive scenario, only the top guessers received rewards. Our findings show that in the inclusive scenario, participants exhibit herding behavior by coordinating their bets, while in the exclusive scenario, they diversify their bets across multiple options. The main general insight of our findings is that in moderate competitions, one tends to join the majority to avoid standing out in case of failure, whereas in intense competitions, one tends to differentiate oneself from one’s peers to ensure that success stands out. This insight is relevant for a broad domain of strategic interactions.
AB - We explore strategic betting in competitive environments with multiple participants and potential winners. We examine two scenarios: an “inclusive” low-competition scenario with many winners and an “exclusive” high-competition scenario with few winners. Using a simple model, we illustrate the strategic insights in these scenarios and present experimental results that align with our predictions. In the experiment, participants made repeated bets with feedback on past results and their payoffs. In the inclusive scenario, all but the worst guessers were rewarded, while in the exclusive scenario, only the top guessers received rewards. Our findings show that in the inclusive scenario, participants exhibit herding behavior by coordinating their bets, while in the exclusive scenario, they diversify their bets across multiple options. The main general insight of our findings is that in moderate competitions, one tends to join the majority to avoid standing out in case of failure, whereas in intense competitions, one tends to differentiate oneself from one’s peers to ensure that success stands out. This insight is relevant for a broad domain of strategic interactions.
KW - Experimental Economics
KW - Competitive Decision-Making
KW - Herding Behavior
KW - Divergence Strategy
KW - Inclusive vs. Exclusive Scenarios
KW - Multi-Winner Competition
M3 - Working paper
T3 - Economics Working Papers Series
BT - The Grant Proposal Game
PB - Lancaster University, Department of Economics
CY - Lancaster
ER -