Contests for public goods

Competitive situations are ubiquitous in society. From international conflicts for resources to the daily competition for clients, a finite amount of wealth (and attention) has to be allotted between stakeholders. This happens on various layers of society and with different degrees of hostility. Using the controlled environment of laboratory experiments, the role of fundamental institutions were investigated in situations where groups compete for a prize of fixed or endogenous size.
The research shows that in a competitive environment, groups oftentimes do not use interaction mechanisms to coordinate towards a more efficient outcome. Instead, participants incentivise their teammates to pursue a more aggressive strategy to outdo the opposing group, beyond a financially prudent level of appropriation.