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Strategic Investment Decisions in Multi-stage Contests with Heterogeneous Players

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  • Christian Deutscher
  • Marco Sahm
  • Sandra Schneemann
  • Hendrik Sonnabend

Abstract

We study strategic investment decisions in multi-stage contests with heterogeneous players. Our theoretical model of a round-robin rank-order tournament predicts that players conserve resources in a current contest to spend more in the subsequent contest if the degree of heterogeneity in the current (subsequent) contest is sufficiently large (small). We confirm these predictions using data from German professional soccer, where players are subject to a one-match ban if they accumulate five yellow cards. We find that players with four yellow cards facing the risk of being suspended for the next match are (i) less likely to be fielded when the heterogeneity in the current match increases and (ii) more likely to receive a fifth yellow card in the current match when the heterogeneity in the next match increases or when the heterogeneity in the next match but one (for which they return from their ban) decreases.

Suggested Citation

  • Christian Deutscher & Marco Sahm & Sandra Schneemann & Hendrik Sonnabend, 2019. "Strategic Investment Decisions in Multi-stage Contests with Heterogeneous Players," CESifo Working Paper Series 7474, CESifo.
    • Handle: RePEc:ces:ceswps:_7474
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    Cited by:

    1. Dmitry Dagaev & Andrey Zubanov, 2022. "Round-robin tournaments with limited resources," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(3), pages 525-583, October.
    2. Deutscher, Christian & Neuberg, Lena & Thiem, Stefan, 2023. "Who’s afraid of the GOATs? - Shadow effects of tennis superstars," Journal of Economic Psychology, Elsevier, vol. 99(C).
    3. Fabian Dietz & Marco Sahm, 2024. "Fairness in Round-Robin Tournaments with Four Players and Endogenous Sequences," CESifo Working Paper Series 11145, CESifo.
    4. Stefan Thiem, 2021. "Spillover Effects in Contests with Heterogeneous Players - Evidence from European Football," Applied Economics, Taylor & Francis Journals, vol. 53(12), pages 1378-1394, March.
    5. Jialu Liu & Keehyung Kim, 2023. "Designing contests for data science competitions: Number of stages and the prize structures," Production and Operations Management, Production and Operations Management Society, vol. 32(11), pages 3752-3772, November.

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    More about this item

    Keywords

    tournaments; multi-stage contests; heterogeneity; anticipating behavior; shadow effects;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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