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Time Discounting in Strategic Contests

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  • Cary Deck
  • Salar Jahedi

Abstract

In many contests, such as political campaigns or R&D expenditures, there is at least some trade‐off between immediate money outlay and potential future benefits. This timing aspect has mostly been ignored by the contest literature. If contestants exhibit a strong present bias, such as that shown by past individual choice experiments, then benefits that are deferred to the future will lead to a significant drop in investment. This paper uses controlled laboratory experiments to explore how the timing of prize payment impacts behavior in a contest with a unique Nash equilibrium strategy. We find no evidence that people significantly discount future prizes in our contests, despite the fact that we do replicate present bias in a separate individual choice experiment.

Suggested Citation

  • Cary Deck & Salar Jahedi, 2015. "Time Discounting in Strategic Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 151-164, March.
    • Handle: RePEc:bla:jemstr:v:24:y:2015:i:1:p:151-164
    DOI: 10.1111/jems.12082
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    References listed on IDEAS

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    Cited by:

    1. Jindapon, Paan & Sujarittanonta, Pacharasut & Viriyavipart, Ajalavat, 2022. "Prize-linked savings games: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 133(C), pages 202-229.
    2. Bortolotti, Stefania & Kölle, Felix & Wenner, Lukas, 2022. "On the persistence of dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1053-1065.
    3. Jindrich Matousek & Tomas Havranek & Zuzana Irsova, 2022. "Individual discount rates: a meta-analysis of experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 318-358, February.
    4. Subhasish M. Chowdhury & Anwesha Mukherjee & Theodore L. Turocy, 2020. "That’s the ticket: explicit lottery randomisation and learning in Tullock contests," Theory and Decision, Springer, vol. 88(3), pages 405-429, April.
    5. Deck, Cary & Jahedi, Salar, 2015. "The effect of cognitive load on economic decision making: A survey and new experiments," European Economic Review, Elsevier, vol. 78(C), pages 97-119.

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