Willingness to fight on:Environmental quality in dynamic contests

Alberto Salvo (National University of Singapore)

November 15, 2021, 11:00–12:15


Environment Economics Seminar


We show that the prevalence of prolonged contests in professional tennis drops sharply when the ambient environment deteriorates through heat or pollution. We develop a dynamic model of multi-battle competition to investigate how the disutility from a protracted competition shapes agents’ willingness to fight on. Our theory predicts that a poor environment amplifies the momentum of a competitor’s headstart. We show how model primitives including preferences for improved working conditions (environmental amenities in our setting) can be inferred from battle-to-battle transition probabilities. We provide clean evidence that heat and pollution affect individuals’ incentives to compete strategically. Model estimates show that in a contest between equally able rivals at the median prize of $15,100, the value of ahead start is $130 to $370 higher in a degraded environment compared with a climate-controlled one.