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Selecting the Best? Spillover and Shadows in Elimination Tournaments

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  • Jennifer Brown

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208; and National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Dylan B. Minor

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

Abstract

We consider how past, current, and future competition within an elimination tournament affect the probability that the stronger player wins. We present a two-stage model that yields the following main results: (1) a shadow effect wherein the stronger the expected future competitor, the lower the probability that the stronger player wins in the current stage; and (2) an effort spillover effect wherein previous effort reduces the probability that the stronger player wins in the current stage. We test our theory predictions using data from high-stakes tournaments. Empirical results suggest that shadow and spillover effects influence match outcomes and have already been priced into betting markets. This paper was accepted by Bruno Cassiman, business strategy.

Suggested Citation

  • Jennifer Brown & Dylan B. Minor, 2014. "Selecting the Best? Spillover and Shadows in Elimination Tournaments," Management Science, INFORMS, vol. 60(12), pages 3087-3102, December.
    • Handle: RePEc:inm:ormnsc:v:60:y:2014:i:12:p:3087-3102
    DOI: 10.1287/mnsc.2014.2014
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    More about this item

    Keywords

    elimination tournament; dynamic contest; contest design; effort choice; betting markets;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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