Endogenous Timing in a Gaming Tournament

Abstract

This paper examines the theoretical background and actual behav- ior in a gaming tournament with endogenous timing where a person has more incentive, structure, and time to form a strategy. The baseline treatment suggests that subgame perfection is a reasonable predictor of behavior — subjects made 170 of 208 theoretically predicted choices of best actions, with the majority of mistakes made in timing choices by the players who did not survive the cut to the second round. Four sensitivity treatments established that the design feature that lead to more predictable behavior was time to think — 745 of 960 correctly predicted decisions with more time versus 595 of 960 with less time. A random effects Probit model suggests that the key design feature that closed the gap be- tween predicted and observed behavior was not necessarily the non-linear payoffs created by the tournament design, but rather that the key was providing people with more time to think about their strategy.