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Early Round Upsets and Championship Blowouts

Author

Listed:
  • Rick Harbaugh

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Tilman Klumpp

    (Department of Economics, Indiana University)

Abstract

In equilibrium play of a two-round tournament we find that underdogs exert more effort in the opening round while favorites save more effort for the final. Ability differences between players are therefore compressed in the opening round so upsets are more likely, and amplified in the final so blowouts are more likely. Measures that reduce the need to strategically allocate effort across games make for a more exciting final but a less exciting opening round. Consistent with the model, introduction of a one-day rest period between regional semi-final and final matches in the NCAA men’s basketball tournament was found to increase the favorite’s victory margin in the semi-finals by about five points. Non-sports applications of the model include the allocation of resources across primaries and general elections by candidates and the allocation of resources across a career ladder by managers.

Suggested Citation

  • Rick Harbaugh & Tilman Klumpp, 2004. "Early Round Upsets and Championship Blowouts," Working Papers 2004-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  • Handle: RePEc:iuk:wpaper:2004-09
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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2004-09-harbaugh-klumpp.pdf
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    Keywords

    contest; tournament; all-pay auction;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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