Selecting the Best? Spillover and Shadows in Elimination Tournaments
NBER Working Paper No. 17639
We consider how past, current, and future competition within an elimination tournament affect the likelihood of selecting the stronger player as the winner. We present a two-stage model that yields the following main results: (1) a shadow effect – the weaker the expected future competitor, the greater 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 and betting markets. Empirical results suggest that shadow and spillover effects influence match outcomes.
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This paper was revised on November 14, 2012