INTERMEDIATE INFORMATION, LOSS AVERSION, AND EFFORT: EMPIRICAL EVIDENCE

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)