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Are competitors forward looking in strategic interactions? Field evidence from multistage tournaments

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  • Lackner, Mario
  • Stracke, Rudi
  • Sunde, Uwe
  • Winter-Ebmer, Rudolf

Abstract

This paper investigates whether decision makers are forward looking in dynamic strategic interactions and incorporate variations of continuation values in their choices. Using data from professional and semi-professional basketball tournaments, we find that the expected relative strength of a team in future interactions indeed affects behavior in the present. The results also show that the response to changes in the continuation value is stronger if the structure of prizes is convex across stages, if the players are in a decisive game and if the prevalence of free riding within a team is low.

Suggested Citation

  • Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2020. "Are competitors forward looking in strategic interactions? Field evidence from multistage tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 544-565.
    • Handle: RePEc:eee:jeborg:v:179:y:2020:i:c:p:544-565
    DOI: 10.1016/j.jebo.2020.09.012
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    1. Enzo Brox & Daniel Goller, 2024. "Tournaments, Contestant Heterogeneity and Performance," Papers 2401.05210, arXiv.org.

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    More about this item

    Keywords

    Promotion tournament; Multistage contest; Elimination; Forward-looking behavior; Heterogeneity;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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