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

  • Shakun D. Mago
  • Roman M. Sheremeta
Original Paper
  • 101 Downloads

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.

Keywords

Election Sequential contests Simultaneous contests Experiments 

JEL Classification

C72 C73 C91 D72 

Notes

Acknowledgements

We thank David Cooper, the Editor of this journal, and two anonymous referees for their valuable suggestions. We have benefitted from the helpful comments of Tim Cason, Sera Linardi, Vai-Lam Mui, Andrew Healy, James Konow, Rebecca Morton, Tim Shields, Stergios Skaperdas, Jonathan Wight, seminar participants at Loyola Marymount University, University of California Irvine, University of Richmond and participants at the International Economic Science Association Conference in Copenhagen, the Virginia Association for Economists Meeting, and the Pittsburgh Behavioral Models of Politics Conference for helpful comments. University of Richmond provided funds for conducting the experiments. The usual disclaimers apply.

Supplementary material

10683_2018_9569_MOESM1_ESM.docx (137 kb)
Supplementary material 1 (DOCX 136 kb)

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Copyright information

© Economic Science Association 2018

Authors and Affiliations

  1. 1.Department of Economics, Robins School of BusinessUniversity of RichmondRichmondUSA
  2. 2.Weatherhead School of ManagementCase Western Reserve UniversityClevelandUSA
  3. 3.Economic Science InstituteChapman UniversityOrangeUSA

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