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

Müller-Langer, Frank and Andreoli-Versbach, Patrick (2017): Leading-Effect, Risk-Taking and Sabotage in Two-Stage Tournaments: Evidence from a Natural Experiment. In: Jahrbücher für Nationalökonomie und Statistik, Vol. 237, No. 1: pp. 1-28

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.

• Item Type: Journal article
• Faculties: Economics
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0021-4027
• Language: English