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Observing your competitor – The role of effort information in two-stage tournaments

Sandra Ludwig and Gabriele K. Lünser

Journal of Economic Psychology, 2012, vol. 33, issue 1, 166-182

Abstract: We consider two-stage tournaments with different information structures: Either competitors observe each others’ first-stage effort before entering the second stage or not. In laboratory experiments, we observe that subjects adjust their effort to the effort information (if available): While subjects who lead continue to exert the higher effort, they tend to lower their effort relative to the first stage, whereas those who lag increase it. Moreover, the larger the first-stage effort gap, the lower are second-stage efforts. These observations are consistent with our predictions for status-concerned subjects who care about their relative (interim) standing and the size of the effort gap.

Keywords: Tournament design; Status; Feedback; Incentives; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D80 M52 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:1:p:166-182

DOI: 10.1016/j.joep.2011.09.011

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