Are competitors forward looking in strategic interactions? Evidence from the field

M. Lackner, R. Stracke, U. Sunde, R. Winter-Ebmer

Research output: Working paperProfessional

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Abstract

This paper investigates empirically whether decision makers are forward looking in
dynamic strategic interactions. In particular, we test whether decision makers in multistage tournaments take heterogeneity induced changes of continuation values and the ability of their immediate opponent into account when choosing effort. Using
data from professional and semi-professional basketball tournaments, we find that
effort is negatively affected by the ability of the current opponent, consistent with the
theoretical prediction and previous evidence. More importantly, the results indicate
that the expected relative strength in future interactions does affect behavior in earlier stages, which provides support for the 'standard’ view that decision makers are forward looking in dynamic strategic interactions.
Original languageEnglish
Place of PublicationMaastricht
PublisherResearch Centre for Education and the Labour Market
Publication statusPublished - 1 Jan 2015

Publication series

SeriesROA Research Memoranda
Number010

Cite this

Lackner, M., Stracke, R., Sunde, U., & Winter-Ebmer, R. (2015). Are competitors forward looking in strategic interactions? Evidence from the field. Research Centre for Education and the Labour Market. ROA Research Memoranda, No. 010