Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field

Mario Lackner, Rudi Stracke, Uwe Sunde and Rudolf Winter-Ebmer

No 9564, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates empirically whether decision makers are forward looking in dynamic strategic interactions. In particular, we test whether decision makers in multi-stage tournaments take heterogeneity induced changes of continuation values and the ability of their immediate opponent into account when choosing effort. Using data from professional and semi-professional basketball tournaments, we find that effort is negatively affected by the ability of the current opponent, consistent with the theoretical prediction and previous evidence. More importantly, the results indicate that the expected relative strength in future interactions does affect behavior in earlier stages, which provides support for the 'standard' view that decision makers are forward looking in dynamic strategic interactions.

Keywords: forward-looking behavior; heterogeneity; elimination; multi-stage contest; promotion tournament (search for similar items in EconPapers)
JEL-codes: D84 D90 J33 M51 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2015-12
New Economics Papers: this item is included in nep-cse
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - published in: Journal of Economic Behavior and Organisation, 2020, 179, 544-565

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https://docs.iza.org/dp9564.pdf (application/pdf)

Related works:
Working Paper: Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field (2015)
Working Paper: Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field (2015)
Working Paper: Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field (2015)
Working Paper: Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field (2015)
Working Paper: Are competitors forward looking in strategic interactions?: evidence from the field (2015)
Working Paper: Are competitors forward looking in strategic interactions? Evidence from the field (2015)
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