Group size and matching protocol in contests

We investigate the effects of partner and random stranger matching protocols in Tullock contests between two and between three players. In the groups of three players, we find no difference in the level or the dispersion of bids between matching protocols. For the two-player case, however, a partner matching results both in a lower level and a lower dispersion of bids – indicating tacit collusion. We conclude that unless one is interested in two-player contests or unless a particular matching protocol is required for the specific research, using a partner matching is preferred since it allows more flexibility in budget, logistics and data analysis. Furthermore, adding to the literature on group size, we find no difference in absolute bid levels due to group size across matching protocols. But the overbidding rate, defined as the bid over the Nash equilibrium level scaled with the Nash bid, is lower for the two-player groups.

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