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Leading-Effect, Risk-Taking and Sabotage in Two-Stage Tournaments: Evidence from a Natural Experiment

Frank Müller-Langer and Patrick Andreoli-Versbach
Authors registered in the RePEc Author Service: Mueller-Langer ()

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: Existing theory suggests that three "order effects" may emerge in multi-stage tournaments with information feedback. First, participants adjust effort across stages, which could advantage the leading participant who faces a larger " effective prize" after an initial victory (leading-effect). Second, leading participants might engage in sabotage activities to protect their lead thereby decreasing the rivals' output. Finally, participants lagging behind may increase risk at the final stage as they have " nothing to lose" (risk-taking). The expected order effects based on existing theory cannot be supported empirically in a natural experiment setting, where professional teams compete in a two-stage tournament with asymmetric initial conditions and clear incentives.

Date: 2017
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Published in Jahrbücher für Nationalökonomie und Statistik 1 237(2017): pp. 1-28

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