Are competitors forward looking in strategic interactions? Field evidence from multistage tournaments

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Abstract

This paper investigates whether decision makers are forward looking in dynamic strategic interactions and incorporate variations of continuation values in their choices. Using data from professional and semi-professional basketball tournaments, we find that the expected relative strength of a team in future interactions indeed affects behavior in the present. The results also show that the response to changes in the continuation value is stronger if the structure of prizes is convex across stages, if the players are in a decisive game and if the prevalence of free riding within a team is low.
Original languageEnglish
Pages (from-to)544-565
Number of pages22
JournalJournal of Economic Behavior and Organization
Volume179
DOIs
Publication statusPublished - Nov 2020

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