IDEAS home Printed from https://ideas.repec.org/a/eee/soceco/v91y2021ics2214804321000070.html
   My bibliography  Save this article

Sequential competitions with a middle-mover advantage

Author

Listed:
  • Kendall, Ryan

Abstract

This paper investigates the incentives that drive advantageous positions in sequential competitions. Sequential competitions have been shown to have either a first- or last-mover advantage. In contrast, this paper illustrates a general sequential-move competition where the first- and last-moving agents are the least profitable while the middle-moving agent is guaranteed to earn the highest possible payoff. This result provide for a new intuition about the underlying incentives in a sequential decision structure which are tested using a multiple-round laboratory experiment. Experimental data aggregated across all rounds support the prediction of a first- and last-mover disadvantage along with a middle-mover advantage. Furthermore, the data suggest that subjects learn as they gain experience with this competition. In this manner, a sequential decision structure with inexperienced agents will benefit the first- and middle-moving agents, whereas the same decision structure with experienced agents will only benefit the middle-moving agents.

Suggested Citation

  • Kendall, Ryan, 2021. "Sequential competitions with a middle-mover advantage," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 91(C).
    • Handle: RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000070
    DOI: 10.1016/j.socec.2021.101667
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2214804321000070
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socec.2021.101667?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Benny Moldovanu & Aner Sela, 2008. "The Optimal Allocation of Prizes in Contests," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 615-631, Springer.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Eddie Dekel & Michele Piccione, 2000. "Sequential Voting Procedures in Symmetric Binary Elections," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 34-55, February.
    4. Philip A. Haile & Ali Hortaçsu & Grigory Kosenok, 2008. "On the Empirical Content of Quantal Response Equilibrium," American Economic Review, American Economic Association, vol. 98(1), pages 180-200, March.
    5. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 375-394.
    6. Barut, Yasar & Kovenock, Dan, 1998. "The symmetric multiple prize all-pay auction with complete information," European Journal of Political Economy, Elsevier, vol. 14(4), pages 627-644, November.
    7. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2008. "Rigging the lobbying process: An application of the all-pay auction," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 331-336, Springer.
    8. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 512-529, Winter.
    9. Pankaj Ghemawat & A. Michael Spence, 1985. "Learning Curve Spillovers and Market Performance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(Supplemen), pages 839-852.
    10. Tumennasan, Norovsambuu, 2013. "To err is human: Implementation in quantal response equilibria," Games and Economic Behavior, Elsevier, vol. 77(1), pages 138-152.
    11. Poulsen, Anders Udo, 2007. "Information and endogenous first mover advantages in the ultimatum game: An evolutionary approach," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 129-143, September.
    12. Gary L. Lilien & Eunsang Yoon, 1990. "The Timing of Competitive Market Entry: An Exploratory Study of New Industrial Products," Management Science, INFORMS, vol. 36(5), pages 568-585, May.
    13. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    14. Marvin B. Lieberman & David B. Montgomery, 1988. "First‐mover advantages," Strategic Management Journal, Wiley Blackwell, vol. 9(S1), pages 41-58, June.
    15. Paul Klemperer & Jeremy Bulow, 1999. "The Generalized War of Attrition," American Economic Review, American Economic Association, vol. 89(1), pages 175-189, March.
    16. Guarnaschelli, Serena & McKelvey, Richard D. & Palfrey, Thomas R., 2000. "An Experimental Study of Jury Decision Rules," American Political Science Review, Cambridge University Press, vol. 94(2), pages 407-423, June.
    17. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 65-96.
    18. Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 9-41, June.
    19. Turocy, Theodore L., 2005. "A dynamic homotopy interpretation of the logistic quantal response equilibrium correspondence," Games and Economic Behavior, Elsevier, vol. 51(2), pages 243-263, May.
    20. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
    21. Zhang, Boyu & Hofbauer, Josef, 2016. "Quantal response methods for equilibrium selection in 2×2 coordination games," Games and Economic Behavior, Elsevier, vol. 97(C), pages 19-31.
    22. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    23. Eddie Dekel Jr. & Michele Piccione Jr., 2014. "The Strategic Dis/advantage of Voting Early," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 162-179, November.
    24. Blume, Lawrence E., 2003. "How noise matters," Games and Economic Behavior, Elsevier, vol. 44(2), pages 251-271, August.
    25. Zhang, Boyu, 2016. "Quantal response methods for equilibrium selection in normal form games," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 113-123.
    26. Schmalensee, Richard, 1982. "Product Differentiation Advantages of Pioneering Brands," American Economic Review, American Economic Association, vol. 72(3), pages 349-365, June.
    27. Theodore Turocy, 2010. "Computing sequential equilibria using agent quantal response equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(1), pages 255-269, January.
    28. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    29. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
    30. Jacob Goeree & Charles Holt & Thomas Palfrey, 2005. "Regular Quantal Response Equilibrium," Experimental Economics, Springer;Economic Science Association, vol. 8(4), pages 347-367, December.
    31. Battaglini, Marco, 2005. "Sequential voting with abstention," Games and Economic Behavior, Elsevier, vol. 51(2), pages 445-463, May.
    32. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
    33. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
    34. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    35. Bresnahan, Timothy F, 1985. "Post-entry Competition in the Plain Paper Copier Market," American Economic Review, American Economic Association, vol. 75(2), pages 15-19, May.
    36. Jacob K. Goeree & Charles A. Holt & Thomas R. Palfrey, 2016. "Quantal Response Equilibrium:A Stochastic Theory of Games," Economics Books, Princeton University Press, edition 1, number 10743.
    37. Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
    38. Wit, Jorgen, 1999. "Social Learning in a Common Interest Voting Game," Games and Economic Behavior, Elsevier, vol. 26(1), pages 131-156, January.
    39. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    40. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-526, June.
    41. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    42. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
    43. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aner Sela, 2018. "Reverse Contests," Working Papers 1804, Ben-Gurion University of the Negev, Department of Economics.
    2. HHironori Otsubo, 2012. "Contests with Incumbency Advantages: An Experiment Investigation of the Effect of Limits on Spending Behavior and Outcome," Jena Economics Research Papers 2012-020, Friedrich-Schiller-University Jena.
    3. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    4. Alex Krumer & Reut Megidish & Aner Sela, 2020. "The optimal design of round-robin tournaments with three players," Journal of Scheduling, Springer, vol. 23(3), pages 379-396, June.
    5. Rodrigo A. Velez & Alexander L. Brown, 2018. "Empirical Equilibrium," Papers 1804.07986, arXiv.org, revised Jul 2020.
    6. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    7. Zhang, Boyu & Hofbauer, Josef, 2016. "Quantal response methods for equilibrium selection in 2×2 coordination games," Games and Economic Behavior, Elsevier, vol. 97(C), pages 19-31.
    8. Segev, Ella & Sela, Aner, 2014. "Multi-stage sequential all-pay auctions," European Economic Review, Elsevier, vol. 70(C), pages 371-382.
    9. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
    10. Cohen, Chen & Lagziel, David & Levi, Ofer & Sela, Aner, 2023. "The role of the second prize in all-pay auctions with two heterogeneous prizes," Journal of Mathematical Economics, Elsevier, vol. 105(C).
    11. Pradeep Dubey & Siddhartha Sahi, 2016. "Optimal Prizes," Department of Economics Working Papers 16-03, Stony Brook University, Department of Economics.
    12. Herrera, Helios & Llorente-Saguer, Aniol & McMurray, Joseph C., 2019. "Information aggregation and turnout in proportional representation: A laboratory experiment," Journal of Public Economics, Elsevier, vol. 179(C).
    13. Kohei Kawamura & Vasileios Vlaseros, 2015. "Expert Information and Majority Decisions," Edinburgh School of Economics Discussion Paper Series 261, Edinburgh School of Economics, University of Edinburgh.
    14. Aner Sela, 2002. "Contest Architecture (jointly with Benny Moldovanu)," Theory workshop papers 357966000000000088, UCLA Department of Economics.
    15. Ella Segev & Aner Sela, 2014. "Sequential all-pay auctions with head starts," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 893-923, December.
    16. Minchuk, Yizhaq & Sela, Aner, 2014. "All-pay auctions with certain and uncertain prizes," Games and Economic Behavior, Elsevier, vol. 88(C), pages 130-134.
    17. Cohen, Chen & Sela, Aner, 2008. "Allocation of prizes in asymmetric all-pay auctions," European Journal of Political Economy, Elsevier, vol. 24(1), pages 123-132, March.
    18. Aner Sela, 2012. "Sequential two-prize contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 383-395, October.
    19. Krumer, Alex & Megidish, Reut & Sela, Aner, 2023. "Strategic manipulations in round-robin tournaments," Mathematical Social Sciences, Elsevier, vol. 122(C), pages 50-57.
    20. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.

    More about this item

    Keywords

    Middle-mover advantage; First-mover disadvantage; Last-mover disadvantage; Sequential competition; All-pay contest; Voting; Information cascade; Quantal Response Equilibrium; Laboratory experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000070. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620175 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.