Selecting the Best? Spillover and Shadows in Elimination Tournaments
44 Pages Posted: 3 Dec 2011 Last revised: 14 Mar 2021
Date Written: December 2011
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.
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