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Hold or roll: reaching the goal in jeopardy race games

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  • Darryl Seale
  • William Stein
  • Amnon Rapoport

Abstract

We consider a class of dynamic tournaments in which two contestants are faced with a choice between two courses of action. The first is a riskless option (“hold”) of maintaining the resources the contestant already has accumulated in her turn and ceding the initiative to her rival. The second is the bolder option (“roll”) of taking the initiative of accumulating additional resources, and thereby moving ahead of her rival, while at the same time sustaining a risk of temporary setback. We study this tournament in the context of a jeopardy race game (JRG), extend the JRG to $$N > 2$$ N > 2 contestants, and construct its equilibrium solution. Compared to the equilibrium solution, the results of three experiments reveal a dysfunctional bias in favor of the riskless option. This bias is substantially mitigated when the contestants are required to commit in advance how long to pursue the risky course of action. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Darryl Seale & William Stein & Amnon Rapoport, 2014. "Hold or roll: reaching the goal in jeopardy race games," Theory and Decision, Springer, vol. 76(3), pages 419-450, March.
    • Handle: RePEc:kap:theord:v:76:y:2014:i:3:p:419-450
    DOI: 10.1007/s11238-013-9388-x
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    References listed on IDEAS

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    1. Stein, William E. & Seale, Darryl A. & Rapoport, Amnon, 2003. "Analysis of heuristic solutions to the best choice problem," European Journal of Operational Research, Elsevier, vol. 151(1), pages 140-152, November.
    2. Hey, John D., 1982. "Search for rules for search," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 65-81, March.
    3. J. Neil Bearden & Amnon Rapoport & Ryan O. Murphy, 2006. "Sequential Observation and Selection with Rank-Dependent Payoffs: An Experimental Study," Management Science, INFORMS, vol. 52(9), pages 1437-1449, September.
    4. John D. Hey & Julia A. Knoll, 2018. "How far ahead do people plan?," World Scientific Book Chapters, in: Experiments in Economics Decision Making and Markets, chapter 12, pages 301-306, World Scientific Publishing Co. Pte. Ltd..
    5. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    6. Hey, John D., 1981. "Are optimal search rules reasonable? and vice versa? (And does it matter anyway?)," Journal of Economic Behavior & Organization, Elsevier, vol. 2(1), pages 47-70, March.
    7. Seale, Darryl A. & Rapoport, Amnon, 1997. "Sequential Decision Making with Relative Ranks: An Experimental Investigation of the "Secretary Problem">," Organizational Behavior and Human Decision Processes, Elsevier, vol. 69(3), pages 221-236, March.
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