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SIMULTANEOUS DECISION-MAKING IN COMPETITIVE AND COOPERATIVE ENVIRONMENTS

Authors

  • ANYA C. SAVIKHIN,

    1. Savikhin: Department of Consumer Science, School of Human Ecology, University of Wisconsin-Madison, 1305 Linden Drive, Madison, WI 53706. Phone 765-409-0425, Fax 714-532-6081, E-mail anya@purdue.edu
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  • ROMAN M. SHEREMETA

    1. Sheremeta: Argyros School of Business and Economics, Chapman University, One University Drive, Orange, CA 92866. Phone 765-418-7175, Fax 714-532-6081, E-mail sheremet@chapman.edu
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    • We thank two anonymous referees and an Advisory Editor for valuable suggestions, as well as Jack Barron, Tim Cason, David Dickinson, Justin Krieg, Casey Rowe, seminar participants at Purdue University, University of California, Irvine, and participants at the 2009 Economic Science Association conference for helpful comments. Any remaining errors are ours.


Abstract

We experimentally investigate simultaneous decision-making in two contrasting environments: one that encourages competition (lottery contest) and one that encourages cooperation (public good game). We find that simultaneous participation in the public good game affects behavior in the contest, decreasing sub-optimal overbidding. Contributions to the public good are not affected by participation in the contest. The direction of behavioral spillover is explained by differences in strategic uncertainty and path-dependence across games. Our design allows us to compare preferences for cooperation and competition. We find that in early periods, there is a negative correlation between decisions in competitive and in cooperative environments. (JEL C72, C91)

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