Framing and repeated competition

Abstract

We use a unified framework to model rent-seeking (Tullock) contests and games of strategic complements or substitutes. In each game, we compare an ‘abstract’ frame with an ‘economic’ frame. We find more competitive behavior under economic than under abstract framing in the contest and in the game of strategic complements, but not in the game of strategic substitutes. Variation in the strategic nature of the game interacts differently with preferences than with beliefs, allowing us to identify that framing operates primarily through beliefs, and diminishes as beliefs are updated. We model beliefs and preferences using a static and a dynamic framework and show that average choices and adaptation behavior can be explained if both preferences and beliefs are more competitive under economic framing. Our results suggest that some of the commonly observed competitive behavior in contest and oligopoly experiments could be explained by non-abstract framing being used in these studies.