Preemptive behavior in sequential-move tournaments with heterogeneous agents

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequential. We show that agents' strategic behavior in sequential-move tournaments significantly differ from the one in simultaneous-move tournaments: In a sequential-move tournament with heterogeneous agents, the first acting agent may choose a preemptively high effort so that the following agent gives up. The principal is able to prevent preemptive behavior in equilibrium by choosing a sufficiently small spread between winner and loser prize. Received: January 2003, Accepted: November 2004 JEL Classification: J3, M12, M5 We would like to thank two anonymous referees and the editor Kai Konrad for helpful comments. Financial support by the Deutsche Forschungsgemeinschaft (DFG), projects no. KR 2077/2-1 and SFB/TR 15 ("Governance and the Efficiency of Economic Systems"), is gratefully acknowledged.