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.
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 language | English |
|---|---|
| Place of Publication | Maastricht |
| Publisher | ROA |
| DOIs | |
| Publication status | Published - 1 Jan 2015 |
Publication series
| Series | ROA Research Memoranda |
|---|---|
| Number | 010 |