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
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages55
DOIs
Publication statusPublished - 1 Jan 2015

Publication series

SeriesGSBE Research Memoranda
Number037

Cite this

Lackner, M., Stracke, R., Sunde, U., & Winter-Ebmer, R. (2015). Are competitors forward looking in strategic interactions? : evidence from the field. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 037 https://doi.org/10.26481/umagsb.2015037