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Preemptive Behavior in Sequential-Move Tournaments with Heterogeneous Agents

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  • Peter-J. Jost
  • Matthias Kräkel

Abstract

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequential. We show that agents’ strategic behavior in sequential-move tournaments significantly differ from the one in simultaneous-move tournaments: In a sequential-move tournament with heterogeneous agents, there may be either a first-mover or a second-mover advantage. Under certain conditions the first acting agent chooses a preemptively high effort so that the following agent gives up. The principal is able to prevent preemptive behavior in equilibrium, but he will not implement first-best efforts although the agents are risk neutral.

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File URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse21_2004.pdf
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Bibliographic Info

Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse21_2004.

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Length: 36
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:bon:bonedp:bgse21_2004

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de

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Keywords: preemption; tournaments;

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References

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Cited by:
  1. Gürtler, Oliver, 2006. "Contractual Incentive Provision and Commitment in Rent-Seeking Contests," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 100, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Jost, Peter-J. & Kräkel, Matthias, 2008. "Human capital investments in asymmetric corporate tournaments," Journal of Economics and Business, Elsevier, vol. 60(4), pages 312-331.

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