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INTERMEDIATE INFORMATION, LOSS AVERSION, AND EFFORT: EMPIRICAL EVIDENCE
Author(s) -
Schneemann Sandra,
Deutscher Christian
Publication year - 2017
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12420
Subject(s) - contest , economics , loss aversion , ex ante , microeconomics , perfect information , empirical evidence , substitution (logic) , german , computer science , history , philosophy , programming language , archaeology , political science , law , macroeconomics , epistemology
The present article empirically explores the impact of intermediate information on contestants' effort. Data involving substituted soccer players of the German Bundesliga indicate only weak evidence of a negative effect of ex ante heterogeneity on effort; in contrast, intermediate information, measured by goal difference at the time of substitution, significantly affects effort. Players exert the greatest effort when their team is leading by one goal and reduce their effort when it is trailing. When intermediate information suggests the contest is already decided, players from both teams reduce effort. This behavior is in line with loss aversion, such that players weight potential losses more than potential gains and adjust their effort accordingly. ( JEL Z22, J41, M54)