Abstract: We study a dynamic multi-stage contest that resolves in each stage only with a given probability. Assuming that there is unobservable heterogeneity in intrinsic motivations we derive properties of the equilibrium efforts across the different stages. Whereas in the corresponding complete information benchmark equilibrium efforts are stable across the stages, uncertainty about the type distribution of possible opponents generates learning. We identify reasons for dynamic adjustments of efforts caused by belief formation and updating and by selection of certain types into continuing conflict. A corresponding experimental setup provides evidence for escalation of efforts in later stages, for type heterogeneity, for belief formation and belief updating, and for self-selection. Overall, our results suggest the importance of an appropriate benchmark model when testing predictions on behavior in conflict or related strategic interactions.

Bio: Florian Morath is a Professor of Economics at Goethe University Frankfurt. He received his Ph.D. from Free University of Berlin and was a research fellow at Max Planck Institute for Tax Law and Public Finance, Munich before moving to the University of Frankfurt in 2016. His research focuses on questions in the fields of Applied Microeconomics, Public Economics and Political Economy and currently includes projects on the economics of conflict, taxation and redistribution, and internet markets. Prof. Morath’s research has been published in leading academic journals such as Management Science, Games and Economic Behavior, the International Economic Review, and the European Economic Review.