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Leading-Effect, Risk-Taking and Sabotage in Two-Stage Tournaments: Evidence from a Natural Experiment

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  • Mueller-Langer Frank

    ()

  • Andreoli-Versbach Patrick

    () (Max Planck Institute for Innovation and Competition, Marstallplatz 1, D-80539 Munich, Germany)

Abstract

Existing theory suggests that three “order effects” may emerge in multi-stage tournaments with information feedback. First, participants adjust effort across stages, which could advantage the leading participant who faces a larger “effective prize” after an initial victory (leading-effect). Second, leading participants might engage in sabotage activities to protect their lead thereby decreasing the rivals’ output. Finally, participants lagging behind may increase risk at the final stage as they have “nothing to lose” (risk-taking). The expected order effects based on existing theory cannot be supported empirically in a natural experiment setting, where professional teams compete in a two-stage tournament with asymmetric initial conditions and clear incentives.

Suggested Citation

  • Mueller-Langer Frank & Andreoli-Versbach Patrick, 2017. "Leading-Effect, Risk-Taking and Sabotage in Two-Stage Tournaments: Evidence from a Natural Experiment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(1), pages 1-28, February.
  • Handle: RePEc:jns:jbstat:v:237:y:2017:i:1:p:1-28:n:3
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    More about this item

    Keywords

    tournaments; order effects; leading-effect; risk-taking; sabotage; natural experiments;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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