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Contests with sequential moves: An experimental study

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  • Arthur B. Nelson
  • Dmitry Ryvkin

Abstract

We study experimentally contests in which players make investment decisions sequentially, and information on prior investments is revealed between stages. Using a between-subject design, we consider all possible sequences in contests of three players and test two major comparative statics of the subgame-perfect Nash equilibrium: The positive effect of the number of stages on aggregate investment and earlier mover advantage. The former prediction is decidedly rejected, as we observe a reduction in aggregate investment when more sequential information disclosure stages are added to the contest. The evidence on earlier mover advantage is mixed but mostly does not support theory as well. Both predictions rely critically on large preemptive investment by first movers and accommodation by later movers, which does not materialize. Instead, later movers respond aggressively, and reciprocally, to first movers' investments, while first movers learn to accommodate those responses.

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  • Arthur B. Nelson & Dmitry Ryvkin, 2024. "Contests with sequential moves: An experimental study," Papers 2409.06230, arXiv.org.
    • Handle: RePEc:arx:papers:2409.06230
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    1. Nelson, Arthur B, 2020. "Deterrence in sequential contests: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 86(C).

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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