The Absence of “Order-Effects” in Dynamic Tournaments: Evidence from a Real-life Randomized Experiment

*Patrick Andreoli Versbach
Max Planck Institute for Intellectual Property, Competition

Frank Müller-Langer
Max Planck Institute for Intellectual Property, Competition

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     Last modified: March 8, 2011
     Presentation date: 03/12/2011 10:45 AM in NH 1140, Session C
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Abstract
An important issue in economics is the extent to which the order of repeated interaction has an effect on its outcome, in particular whether the order of interaction plays a significant role in tournaments. We investigate this question by using data from a randomized natural experiment in professional sports competitions. We find strong support for the proposition that the winning probability in dynamic tournaments is independent from the order of interaction. The setting is the two leg knock-out game structure in soccer tournaments where teams are randomly drawn to play either the first or the second game at home. In contrast to previous literature that provides evidence for both a first-mover advantage associated with psychological pressure and preemptive behavior as well as a second-mover advantage due to final-round specific benefits in dynamic tournaments, we show that teams playing the second game home have a 52% winning probability, which is not statistically different from 50%. Thus, the order in which teams are allocated to play the first/second game has no significant influence on the final result. We also show that the absence of “order-effects” is time-independent.