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Jahrbücher für Nationalökonomie und Statistik

Journal of Economics and Statistics

Editor-in-Chief: Winker, Peter

Ed. by Büttner, Thiess / Riphahn, Regina / Smolny, Werner / Wagner, Joachim

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IMPACT FACTOR 2017: 0.456

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2366-049X
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Volume 237, Issue 1

Issues

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

Frank Mueller-Langer / Patrick Andreoli-Versbach
  • Max Planck Institute for Innovation and Competition, Marstallplatz 1, D-80539 Munich, Germany
  • Department of Economics, Ludwig Maximilians University Munich, Professor-Huber-Platz 2, 80539 München, Germany
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Published Online: 2017-01-11 | DOI: https://doi.org/10.1515/jbnst-2016-1000

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.

Keywords: tournaments; order effects; leading-effect; risk-taking; sabotage; natural experiments

JEL Classification: C21; C93; D72

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About the article

Received: 2016-05-21

Revised: 2016-10-02

Accepted: 2016-11-04

Published Online: 2017-01-11

Published in Print: 2017-02-01


Citation Information: Jahrbücher für Nationalökonomie und Statistik, Volume 237, Issue 1, Pages 1–28, ISSN (Online) 2366-049X, ISSN (Print) 0021-4027, DOI: https://doi.org/10.1515/jbnst-2016-1000.

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