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Deterrence in sequential contests: An experimental study

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  • Arthur B. Nelson

    (Department of Economics, Florida State University)

Abstract

Many contests are sequential, with leaders making decisions rst, and followers observing those decisions and responding to them. The theory predicts that, unlike in standard Stackelberg duopoly settings, in two-player sequential contests the leader has no strategic advantage. However, this is no longer the case for sequential contests with multiple leaders. Applications include political competition with two established parties and a possibility for a third party entry, or R&D competition with multiple incumbents and a new entrant. We conduct a lab experiment testing the equilibrium predictions for two- and three-player sequential contests, with the corresponding simultaneous contests as controls. Consistent with theory, we find evidence of entry deterrence by leaders in the three-player sequential contest, but not in the two-player version.

Suggested Citation

  • Arthur B. Nelson, 2019. "Deterrence in sequential contests: An experimental study," Working Papers wp2019_11_02, Department of Economics, Florida State University.
    • Handle: RePEc:fsu:wpaper:wp2019_11_02
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    File URL: https://coss.fsu.edu/econpapers/wpaper/wp2019_11_02.pdf
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    References listed on IDEAS

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    Cited by:

    1. Arthur B. Nelson & Dmitry Ryvkin, 2019. "Contests with sequential moves: An experimental study," Working Papers wp2019_11_01, Department of Economics, Florida State University.

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    More about this item

    Keywords

    contest; sequential move; Stackelberg; deterrence; experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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