Leading-Effect vs. Risk-Taking in Dynamic Tournaments: Evidence from a Real-Life Randomized Experiment

Munich Discussion Paper No. 2013-6

26 Pages Posted: 1 Jul 2013

See all articles by Frank Mueller-Langer

Frank Mueller-Langer

University of the Bundeswehr Munich; Max Planck Institute for Innovation and Competition; European Commission, Joint Research Center

Patrick Andreoli Versbach

Max Planck Institute for Innovation and Competition; Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 17, 2013

Abstract

Two “order effects” may emerge in dynamic 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, participants lagging behind may increase risk at the final stage as they have “nothing to lose” (risk-taking). We use a randomized natural experiment in professional two-game soccer tournaments where the treatment (order of a stage-specific advantage) and team characteristics, e.g. ability, are independent. We develop an identification strategy to test for leading-effects controlling for risk-taking. We find no evidence of leading-effects and negligible risk-taking effects.

Keywords: Tournaments, order effects, leading-effect, risk-taking, randomized natural experiments

JEL Classification: C93, C21, D01, L83

Suggested Citation

Mueller-Langer, Frank and Andreoli Versbach, Patrick, Leading-Effect vs. Risk-Taking in Dynamic Tournaments: Evidence from a Real-Life Randomized Experiment (June 17, 2013). Munich Discussion Paper No. 2013-6, Available at SSRN: https://ssrn.com/abstract=2286139 or http://dx.doi.org/10.2139/ssrn.2286139

Frank Mueller-Langer (Contact Author)

University of the Bundeswehr Munich ( email )

Munich
Germany

Max Planck Institute for Innovation and Competition ( email )

Munich
Germany

European Commission, Joint Research Center

Seville
Spain

Patrick Andreoli Versbach

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

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