Essays in experimental economics: Examining the effects of ambiguity and competition
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Individuals compete against each other in a variety of different settings. In labor markets they compete for promotion; in athletic tournaments they compete for fixed prizes. Important aspects of competitive choices include the probability of success, expected payoffs, the level of ambiguity regarding success, and preferences to compete. I explore the effects of biology and relative performance feedback in regard to these components in three essays. In the first essay I use a unique experiment design to measure ambiguity aversion, which can be modified to also control for risk aversion. A measure of ambiguity aversion has value as individuals in labor markets have ambiguous signals about their probabilities of success in competition. Consequently this measure may be used in future experiment designs to control for heterogeneous preferences for ambiguity and to test whether ambiguity affects behaviors differently than risk. Economic experiments have shown that when given the choice between piece rate and winner-take-all tournament style compensation, women are more reluctant than men to choose tournaments. In the second essay I replicate these findings and then show that giving relative performance feedback moves high ability women towards more competitive compensation schemes, moves low ability men towards less competitive compensation schemes, and removes the gender difference in compensation choices. I then examine differences in choices for women, across the menstrual cycle. I find that women in the low-hormone phase of their cycle are less likely to enter tournaments than women in the high-hormone phase. Men are more likely to choose tournaments than women at either stage. There are no significant selection differences between any of these groups after they receive relative performance feedback. Athletic labor markets provide a unique environment where individuals choose to compete when they have high quality information about their potential competitors. Gender differences for competition have been found to be removed when information about relative abilities is available. In the third essay, to explore the effect of information in a labor market setting, I use a unique data set of approximately 6,000 female and male competitive tennis players during the 2009 season. I focus on whether males and females choose to enter competitive tournaments differently in response to past performance. I find that males continue to compete after performing well in the previous week while females are less likely to compete if they do well. These contrasting behaviors suggest that males and females respond differently to performance feedback.