How Hard to Fight? Cross-Player Effects and Strategic Sophistication in an Asymmetric Contest Experiment

Many political phenomenafrom wars to elections and lobbyinginvolve winner-take-all contests in which the value of the prize differs across the actors involved and from one issue to the next. To better understand competitive behavior in such environments, we conduct a controlled laboratory experiment in which participants face a series of asymmetric prize values in a lottery contest game. We find support for some, but not all, of the game's comparative static predictions. Most subjects respond to changes in their own values, but few subjects conditionally respond to cross-player changes. We also administer two information-based treatmentsfeedback and a calculatorfinding that feedback on past play has a stronger effect on decreasing socially wasteful effort than a payoff calculator. Our data suggest a new type of heterogeneity in the degree of strategic sophistication, one that differs from the existing models of iterated reasoning.