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New Hampshire Effect: behavior in sequential and simultaneous multi-battle contests

Published online by Cambridge University Press:  14 March 2025

Shakun D. Mago
Affiliation:
Department of Economics, Robins School of Business, University of Richmond, 1 Gateway Road, Richmond, VA 23173, USA
Roman M. Sheremeta*
Affiliation:
Weatherhead School of Management, Case Western Reserve University, 11119 Bellflower Road, Cleveland, OH 44106, USA Economic Science Institute, Chapman University, One University Drive, Orange, CA 92866, USA

Abstract

Sequential multi-battle contests are predicted to induce lower expenditure than simultaneous contests. This prediction is a result of a “New Hampshire Effect”—a strategic advantage created by the winner of the first battle. Although our laboratory study provides evidence for the New Hampshire Effect, we find that sequential contests generate significantly higher (not lower) expenditure than simultaneous contests. This is mainly because in sequential contests, there is significant over-expenditure in all battles. We suggest sunk cost fallacy and utility of winning as two complementary explanations for this behavior and provide supporting evidence.

Type
Original Paper
Copyright
Copyright © 2018 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-018-9569-0) contains supplementary material, which is available to authorized users.

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