Contests with sequential moves: An experimental study

Arthur B. Nelson and Dmitry Ryvkin

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Abstract: We study experimentally contests in which players make investment decisions sequentially, and information on prior investments is revealed between stages. Using a between-subject design, we consider all possible sequences in contests of three players and test two major comparative statics of the subgame-perfect Nash equilibrium: The positive effect of the number of stages on aggregate investment and earlier mover advantage. The former prediction is decidedly rejected, as we observe a reduction in aggregate investment when more sequential information disclosure stages are added to the contest. The evidence on earlier mover advantage is mixed but mostly does not support theory as well. Both predictions rely critically on large preemptive investment by first movers and accommodation by later movers, which does not materialize. Instead, later movers respond aggressively, and reciprocally, to first movers' investments, while first movers learn to accommodate those responses.

Date: 2024-09
New Economics Papers: this item is included in nep-exp, nep-gth and nep-ipr
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http://arxiv.org/pdf/2409.06230 Latest version (application/pdf)

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Working Paper: Contests with sequential moves: An experimental study (2019)
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