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• Field Evidence on Individual Behavior & Performance in Rank-Order Tournaments (Download)

  Description: Economic analysis of rank-order tournaments has shown that intensi􀏐ied competition leads to declining performance. Empirical research demonstrates that individuals in tournament-type contests perform less well on average in the presence of larger number of competitors in total and superstars. Particularly in 􀏐ield settings, studies often lack direct evidence about the underlying mechanisms, such as the amount of effort, that might account for these results. Here we exploit a novel dataset on algorithmic programming contests that contains data on individual effort, risk taking, and cognitive errors that may underlie tournament performance outcomes. We 􀏐ind that competitors on average react negatively to an increase in the total number of competitors, and react more negatively to an increase in the number of superstars than non-superstars. We also 􀏐ind that the most negative reactions come from a particular subgroup of competitors: those that are highly skilled, but whose abilities put them near to the top of the ability distribution. For these competitors, we 􀏐ind no evidence that the decline in performance outcomes stems from reduced effort or increased risk taking. Instead, errors in logic lead to a decline in performance, which suggests a cognitive explanation for the negative response to increased competition. We also 􀏐ind that a small group of competitors, who are at the very top of the ability distribution (non-superstars), react positively to increased competition from superstars. For them, we 􀏐ind some evidence of increased effort and no increase in errors of logic, consistent with both economic and psychological explanations.

  Co-Author(s): Kevin J. Boudreau, Constance E. Helfat, Karim R. Lakhani, and Michael Menietti