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Institute of Economics

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  7. New BERG Working Paper No. 176 by Arne Lauber, Christoph March and Marco Sahm published!

New BERG Working Paper No. 176 by Arne Lauber, Christoph March and Marco Sahm published!

In the BERG Working Paper Series Arne Lauber, Christoph March and Marco Sahm have published a new paper entitled "Optimal and Fair Prizing in Sequential Round-Robin Tournaments: Experimental Evidence".

A complete overview of all BERG Working Papers published so far can be found here.

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Abstract

We report results from the first experimental study of round-robin tournaments. In our experiment, we investigate how the prize structure affects the intensity, fairness, and dynamic behavior in sequential round-robin tournaments with three players. We compare tournaments with a second prize equal to either 0%, 50%, or 100% of the first prize. While theory predicts the 50%-treatment to be most intense, we find that aggregate effort is highest in the 0%-treatment. In contrast, our evidence supports the predictions that the 50%-treatment is fairest (though not perfectly fair), whereas the late mover is advantaged in the 100%-treatment and disadvantaged in the 0%-treatment. Also in line with the theory, we identify a strategic (reverse) momentum: after winning the first match, a player increases (decreases) effort in the second match of the 0%-treatment (100%-treatment). Additional findings suggest that dynamic behavior is also subject to a psychological momentum.