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Working paper

Round-Robin Tournaments with Limited Resources

Dagaev D., Zubanov A.
We propose a theoretical model of a round-robin tournament with limited resources motivated by the fact that in a real-world round-robin sport tournament participating teams are sometimes forced to distribute their effort over an extended period. We assume that the participating teams have a limited amount of effort that must be distributed between all matches. We model the outcome of each match as a first-price sealed-bid auction. Results are aggregated after all matches are played with respect to the number of wins. The teams distribute their effort striving to maximize the expected payoff at tournament completion. For a three team tournament, we describe the set of all subgame perfect Nash equilibria in pure strategies. For tournaments with a relatively low first prize, we found two types of equilibria: ‘effort-saving’ and ‘burning out’, both leading to unequal payoffs. In contrast, for tournaments with a large first prize a limited budget of effort, in general, does not allow for the first or the last move advantage to be exploited.