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Selecting the Best? Spillover and Shadows in Elimination Tournaments

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  • Jennifer Brown
  • Dylan B. Minor

Abstract

We consider how past, current, and future competition within an elimination tournament affect the probability that the stronger player wins. We present a two-stage model that yields the following main results: (1) a shadow effect--the stronger the expected future competitor, the lower the probability that the stronger player wins in the current stage and (2) an effort spillover effect--previous effort reduces the probability that the stronger player wins in the current stage. We test our theory predictions using data from high-stakes tournaments. Empirical results suggest that shadow and spillover effects influence match outcomes and have been already been priced into betting markets.

Suggested Citation

  • Jennifer Brown & Dylan B. Minor, 2011. "Selecting the Best? Spillover and Shadows in Elimination Tournaments," NBER Working Papers 17639, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17639
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    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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