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

Published online by Cambridge University Press:  14 March 2025

Shakun D. Mago and
Roman M. SheremetaOpen the ORCID record for Roman M. Sheremeta[Opens in a new window]
Shakun D. Mago
Affiliation:
Department of Economics, Robins School of Business, University of Richmond, 1 Gateway Road, Richmond, VA 23173, USA
Roman M. Sheremeta*
Affiliation:
Weatherhead School of Management, Case Western Reserve University, 11119 Bellflower Road, Cleveland, OH 44106, USAEconomic Science Institute, Chapman University, One University Drive, Orange, CA 92866, USA
*
rshereme@gmail.com
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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

ElectionSequential contestsSimultaneous contestsExperiments

JEL classification

C91: Laboratory, Individual BehaviorC73: Stochastic and Dynamic Games • Evolutionary Games • Repeated GamesD72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting BehaviorC72: Noncooperative Games

Information

Type
Original Paper
Information
Experimental Economics , Volume 22 , Issue 2 , 15 June 2019, pp. 325 - 349
Copyright
Copyright © 2018 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-018-9569-0) contains supplementary material, which is available to authorized users.

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