The Role of Budget Constraints in Sequential Elimination Tournaments
In a forthcoming publication in the Scandinavian Journal of Economics, CBE-head Malin Arve and Olga Chiappinelli study how budget constraints affect provision in sequential elimination tournaments.
We congratulate Malin with her latest publication in The Scandinavian Journal of Economics!
We study how budget constraints affect effort provision in sequential elimination tournaments. Our main result is that introducing budget constraints has two opposing effects on the unconstrained contestants' initial effort and leads to a non‐monotonicity of this effort. This implies that if the budget asymmetry is not too large, total first‐stage effort from unconstrained contestants is larger than in the case with unconstrained contestants only. We also provide evidence that total first‐stage effort and total effort from unconstrained contestants may be larger in an asymmetric contest.
The paper is available at https://doi.org/10.1111/sjoe.12440