Preemptive Behavior in Sequential-Move Tournaments with Heterogeneous Agents
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.
|Date of creation:||Nov 2004|
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