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Observing your competitor – The role of effort information in two-stage tournaments

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  • Ludwig, Sandra
  • Lünser, Gabriele K.

Abstract

We consider two-stage tournaments with different information structures: Either competitors observe each others’ first-stage effort before entering the second stage or not. In laboratory experiments, we observe that subjects adjust their effort to the effort information (if available): While subjects who lead continue to exert the higher effort, they tend to lower their effort relative to the first stage, whereas those who lag increase it. Moreover, the larger the first-stage effort gap, the lower are second-stage efforts. These observations are consistent with our predictions for status-concerned subjects who care about their relative (interim) standing and the size of the effort gap.

Suggested Citation

  • Ludwig, Sandra & Lünser, Gabriele K., 2012. "Observing your competitor – The role of effort information in two-stage tournaments," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 166-182.
  • Handle: RePEc:eee:joepsy:v:33:y:2012:i:1:p:166-182
    DOI: 10.1016/j.joep.2011.09.011
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    2. Shakun D. Mago & Anya C. Savikhin & Roman M. Sheremeta, 2012. "Facing Your Opponents: Social identification and information feedback in contests," Working Papers 12-15, Chapman University, Economic Science Institute.
    3. repec:bla:ecinqu:v:55:y:2017:i:4:p:1759-1770 is not listed on IDEAS
    4. Eisenkopf, Gerald & Friehe, Tim, 2014. "Stop watching and start listening! The impact of coaching and peer observation in tournaments," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 56-70.
    5. Eisenkopf, Gerald & Teyssier, Sabrina, 2013. "Envy and loss aversion in tournaments," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 240-255.
    6. Shinya Kajitani & Keiichi Morimoto & Shiba Suzuki, 2017. "Relative Performance Information Feedback and Just-Pass Behavior: Evidence from a Field Experiment," Working Papers 36, Meisei University, School of Economics.
    7. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2014. "Dynamic incentive effects of relative performance pay: A field experiment," Labour Economics, Elsevier, vol. 28(C), pages 1-13.

    More about this item

    Keywords

    Tournament design; Status; Feedback; Incentives; Experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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