Sequential competitions with a middle-mover advantage

Ryan Kendall

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 91, issue C

Abstract: This paper investigates the incentives that drive advantageous positions in sequential competitions. Sequential competitions have been shown to have either a first- or last-mover advantage. In contrast, this paper illustrates a general sequential-move competition where the first- and last-moving agents are the least profitable while the middle-moving agent is guaranteed to earn the highest possible payoff. This result provide for a new intuition about the underlying incentives in a sequential decision structure which are tested using a multiple-round laboratory experiment. Experimental data aggregated across all rounds support the prediction of a first- and last-mover disadvantage along with a middle-mover advantage. Furthermore, the data suggest that subjects learn as they gain experience with this competition. In this manner, a sequential decision structure with inexperienced agents will benefit the first- and middle-moving agents, whereas the same decision structure with experienced agents will only benefit the middle-moving agents.

Keywords: Middle-mover advantage; First-mover disadvantage; Last-mover disadvantage; Sequential competition; All-pay contest; Voting; Information cascade; Quantal Response Equilibrium; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 D71 D72 L25 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000070

DOI: 10.1016/j.socec.2021.101667

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