New Hampshire Effect: Behavior in Sequential and Simultaneous Multi-Battle Contests

43 Pages Posted: 24 Mar 2018

See all articles by Shakun D. Mago

Shakun D. Mago

University of Richmond - E. Claiborne Robins School of Business

Roman M. Sheremeta

Case Western Reserve University

Date Written: December 7, 2017

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

Suggested Citation

Mago, Shakun Datta and Sheremeta, Roman M., New Hampshire Effect: Behavior in Sequential and Simultaneous Multi-Battle Contests (December 7, 2017). Experimental Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3144705

Shakun Datta Mago

University of Richmond - E. Claiborne Robins School of Business ( email )

Richmond, VA 23173
United States

Roman M. Sheremeta (Contact Author)

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

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