Seminar Vol. 202

Title: Willingness to Fight on: Environmental Valuation in Dynamic Competition

Speaker: Haoming Liu, National University of Singapore

Time: December 6th, 2019    13:30-15:00

Venue: Conference Room 106B, IESR, Zhonghui Building (College of Economics)

About the speaker:

Dr. Haoming Liu is an Associate Professor in the Economics Department at the National University of Singapore. Prior to joining the National University of Singapore, he has worked in the School of Economics, the University of New South Wales, Sydney, for one year. He holds a Ph.D. in Economics from the University of Western Ontario, and a BA in Mechanical Engineering from Northern Jiaotong University, Beijing, China. His research focuses on intergenerational mobility, the Chinese labor market, and the impact of air population on labor productivity, health and school performance. His recent paper on quality-quantity trade-off won the 2015 Kuznets price of the Journal of Population Economics.

Abstract:

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 deteriorating environment enhances the momentum of a competitor’s head start. We show how structural model primitives including the demand for environmental amenities can be inferred from battle-to-battle transition probabilities. In our specific setting of high-profile tennis matches played in Australia and China, an agent’s disutility from an additional battle in either hot weather or polluted air runs into the thousands of dollars relative to cooler and cleaner environments. Overall, we provide clean evidence that heat and pollution affect individuals’ willingness to compete strategically.