About
Articles by Roman
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My book "The Reformation: European success and a chance for Ukraine" was recently published in Ukraine
My book "The Reformation: European success and a chance for Ukraine" was recently published in Ukraine
By Roman Sheremeta
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FINDING THE SWEET SPOT FOR COMPETITIVE BEHAVIOR
FINDING THE SWEET SPOT FOR COMPETITIVE BEHAVIOR
By Roman Sheremeta
Activity
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This is a lecture hall where I studied as a student between 1999-2003 and gave lectures as a professor between 2016-2021. It was destroyed by a…
This is a lecture hall where I studied as a student between 1999-2003 and gave lectures as a professor between 2016-2021. It was destroyed by a…
Shared by Roman Sheremeta
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Czech Republic to supply up to 100,000 shells monthly to Ukraine, says President Pavel. The first shipment of shells under the Czech initiative had…
Czech Republic to supply up to 100,000 shells monthly to Ukraine, says President Pavel. The first shipment of shells under the Czech initiative had…
Shared by Roman Sheremeta
Experience & Education
Licenses & Certifications
Publications
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Principal-Agent Settings with Random Shocks
Management Science
Using a gift exchange experiment, we show that the ability of reciprocity to overcome incentive problems inherent in principal-agent settings is greatly reduced when the agent’s effort is distorted by random shocks and transmitted imperfectly to the principal. Specifically, we find that gift exchange contracts without shocks encourage effort and wages well above standard predictions. However, the introduction of random shocks reduces wages and effort, regardless of whether the shocks can be…
Using a gift exchange experiment, we show that the ability of reciprocity to overcome incentive problems inherent in principal-agent settings is greatly reduced when the agent’s effort is distorted by random shocks and transmitted imperfectly to the principal. Specifically, we find that gift exchange contracts without shocks encourage effort and wages well above standard predictions. However, the introduction of random shocks reduces wages and effort, regardless of whether the shocks can be observed by the principal. Moreover, the introduction of shocks significantly reduces the probability of fulfilling the contract by the agent, the payoff of the principal, and total welfare.
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Overbidding and Overspreading in Rent-Seeking Experiments: Cost Structure and Prize Allocation Rules
Games and Economic Behavior
We study experimentally the effects of cost structure and prize allocation rules on the performance of rent-seeking contests. Most previous studies use a lottery prize rule and linear cost, and ?nd both overbidding relative to the Nash equilibrium prediction and signi?cant variation of efforts, which we term ‘overspreading.’ We investigate the effects of allocating the prize by a lottery versus sharing it proportionally, and of convex versus linear costs of effort, while holding ?xed the Nash…
We study experimentally the effects of cost structure and prize allocation rules on the performance of rent-seeking contests. Most previous studies use a lottery prize rule and linear cost, and ?nd both overbidding relative to the Nash equilibrium prediction and signi?cant variation of efforts, which we term ‘overspreading.’ We investigate the effects of allocating the prize by a lottery versus sharing it proportionally, and of convex versus linear costs of effort, while holding ?xed the Nash equilibrium prediction for effort. We ?nd the share rule results in average effort closer to the Nash prediction, and lower variation of effort. Combining the share rule with a convex cost function further enhances these results. We can explain a signi?cant amount of non-equilibrium behavior by features of the experimental design. These results contribute towards design guidelines for contests based on behavioral principles that take into account implementation features of a contest.
Other authors -
Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules
Games and Economic Behavior, 87, 224-238.
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Why Can’t We Be Friends? Entitlements and the Costs of Conflict
Journal of Peace Research
We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage conflict game where players may attempt to use non-binding side-payments to avoid conflict. In this game, Proposers make offers and Responders decide simultaneously whether to accept the offers and whether to engage in a conflict. A simple theoretical analysis suggests that Proposers should never offer side-payments because Responders should always accept them and then…
We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage conflict game where players may attempt to use non-binding side-payments to avoid conflict. In this game, Proposers make offers and Responders decide simultaneously whether to accept the offers and whether to engage in a conflict. A simple theoretical analysis suggests that Proposers should never offer side-payments because Responders should always accept them and then still choose to enter conflict; however, our experiment reveals that some individuals use this non-binding mechanism to avoid conflict. Moreover, when subjects earn their roles (Proposer or Responder), conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned entitlements impact behavior in three important ways: (1) Proposers who have earned their position persistently make larger offers; (2) larger offers lead to a lower probability of conflict, but (3) Proposers whose offers do not lead to conflict resolution respond spitefully with greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity. This result differs from previous experimental evidence from ultimatum games in which earned entitlements tend to encourage agreement and increase welfare; thus, our findings highlight the important consequences of endogenizing the costs of conflict. Our analysis suggests that earned entitlements alter behavior by influencing the beliefs of Proposers about the willingness of Responders to accept a peaceful resolution. As a result, these Proposers make persistent high offers, and when their beliefs are disappointed by a Responder’s decision to accept a side-payment and still enter conflict, they retaliate.
Other authorsSee publication -
Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study
Journal of Public Economics
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Expenditures and Information Disclosure in Two-Stage Political Contests
Journal of Conflict Resolution
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Can groups solve the problem of over-bidding in contests?
Social Choice and Welfare
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Experimental Comparison of Multi-Stage and One-StageContests
Games and Economic Behavior
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Transparency, Efficiency and the Distribution of Economic Welfare in Pass-Through Investment Trust Games
In review
We design an experiment to examine welfare and behavior in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an investor invests via an intermediary who lends to a borrower. A pre-experiment one-shot version of the game serves as a baseline and to type each subject. We alter the transparency of exchanges between non-adjacent parties. We find transparency of the exchanges between the investor and intermediary does not significantly…
We design an experiment to examine welfare and behavior in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an investor invests via an intermediary who lends to a borrower. A pre-experiment one-shot version of the game serves as a baseline and to type each subject. We alter the transparency of exchanges between non-adjacent parties. We find transparency of the exchanges between the investor and intermediary does not significantly affect welfare. However, transparency regarding exchanges between the intermediary and borrower promotes trust on the part of the investor, increasing welfare. Further, this has asymmetric effects: borrowers and intermediaries achieve greater welfare benefits than investors. We discuss implications for what specific aspects of financial market transparency may facilitate more efficiency.
Other authorsSee publication
Projects
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Experimental Economics
Here is a short video introduction to Experimental Economics class that I teach at CWRU.
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Game Theory class
- Present
A short video introduction to Game Theory class that I teach at CWRU
Languages
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English
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Russian
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Ukrainian
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Organizations
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American Economic Association
Member
- Present
More activity by Roman
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Almost a million students in Ukraine study remotely or in a mixed format, partly remotely and partly offline. Those who attend school offline are…
Almost a million students in Ukraine study remotely or in a mixed format, partly remotely and partly offline. Those who attend school offline are…
Shared by Roman Sheremeta
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A reminder to us all of the price of freedom and life. Ukrainian wounded soldier Zakhar Biryukov became one of the heroes of the "Sculptural" photo…
A reminder to us all of the price of freedom and life. Ukrainian wounded soldier Zakhar Biryukov became one of the heroes of the "Sculptural" photo…
Shared by Roman Sheremeta
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The ban on using long-range missiles is a significant mistake, and Ukraine, along with its allies, is paying a high price for this decision. While…
The ban on using long-range missiles is a significant mistake, and Ukraine, along with its allies, is paying a high price for this decision. While…
Liked by Roman Sheremeta
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“I know that I have less time to live by, than I have lived so far. I feel like a child who was given a box of chocolates. He enjoys eating it, and…
“I know that I have less time to live by, than I have lived so far. I feel like a child who was given a box of chocolates. He enjoys eating it, and…
Shared by Roman Sheremeta
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🤣 "Finally, a politician who shows how we all feel!" #Italy's Meloni is very...expressive upon seeing #Hungary's Orban at the #NATO summit. ☝️…
🤣 "Finally, a politician who shows how we all feel!" #Italy's Meloni is very...expressive upon seeing #Hungary's Orban at the #NATO summit. ☝️…
Liked by Roman Sheremeta
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A 7-year-old boy who was in the Childre’s Hospital Okhmatdyt during the russian attack died. He was admitted to the hospital on July 8. The boy…
A 7-year-old boy who was in the Childre’s Hospital Okhmatdyt during the russian attack died. He was admitted to the hospital on July 8. The boy…
Shared by Roman Sheremeta
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I don’t post fundraisers, but this one hits very close to home: Our dear friend, Alex — a former member of the Ukrainian National Hockey Team…
I don’t post fundraisers, but this one hits very close to home: Our dear friend, Alex — a former member of the Ukrainian National Hockey Team…
Liked by Roman Sheremeta
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Ihor Voronka, a leading singer of the Dumka National Academic Chapel, Honoured Artist of Ukraine, opera singer and actor, has been killed defending…
Ihor Voronka, a leading singer of the Dumka National Academic Chapel, Honoured Artist of Ukraine, opera singer and actor, has been killed defending…
Shared by Roman Sheremeta
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