Working Paper: NBER ID: w17639
Authors: Jennifer Brown; Dylan B Minor
Abstract: We consider how past, current, and future competition within an elimination tournament affect the probability that the stronger player wins. We present a two-stage model that yields the following main results: (1) a shadow effect--the stronger the expected future competitor, the lower the probability that the stronger player wins in the current stage and (2) an effort spillover effect--previous effort reduces the probability that the stronger player wins in the current stage. We test our theory predictions using data from high-stakes tournaments. Empirical results suggest that shadow and spillover effects influence match outcomes and have been already been priced into betting markets.
Keywords: spillover effects; shadow effects; elimination tournaments; competition dynamics
JEL Codes: J01; J3; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stronger expected future competitor (L19) | Lower probability of winning in current stage (D80) |
| Previous effort (D29) | Lower probability of winning in current stage (D80) |
| Stronger expected future competitor (L19) | Current effort exerted by stronger player (C79) |
| Previous games played (C72) | Probability of winning in current stage (C72) |