Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126653
Authors: 
Lackner, Mario
Stracke, Rudi
Sunde, Uwe
Winter-Ebmer, Rudolf
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9564
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.
Subjects: 
promotion tournament
multi-stage contest
elimination
heterogeneity
forward-looking behavior
JEL: 
D84
D90
M51
J33
Document Type: 
Working Paper

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