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The New Palgrave Dictionary of Economics
Costly competitions between economic agents are modeled as contests. Researchers use laboratory experiments to study contests and test comparative static predictions of contest theory. Commonly, researchers find that participants' efforts are significantly higher than predicted by the standard Nash equilibrium. Despite overbidding, most comparative static predictions, such as the incentive effect, the size effect, the discouragement effect and others are supported in the laboratory. Indoi:10.1057/978-1-349-95121-5_3077-1 fatcat:fu46a6jf7rfmthoiywqdduz24m