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The Impact of Losing in a Competition on the Willingness to seek Further Challenges

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  • Thomas Buser

    (University of Amsterdam)

Abstract

How do people react to setbacks and successes? I introduce a new measure of challenge-seeking to determine the effect of winning and losing in a competition on the willingness to seek further challenges. Participants in a lab experiment compete in two-person tournaments and are then informed of their score and the outcome of the competition. Conditional on the score, winning or losing is random. Participants then have to decide on a performance target for a second round: the higher the target, the higher the potential reward, but participants who do not reach the target earn nothing. I find that, conditional on first round scores, losers go for a more challenging target but perform worse, leading to lower earnings and a higher probability of failure. These findings could have important implications for our understanding of individual career paths. Early outcomes coul d alter the probability of success and failure in the long term.

Suggested Citation

  • Thomas Buser, 2014. "The Impact of Losing in a Competition on the Willingness to seek Further Challenges," Tinbergen Institute Discussion Papers 14-083/I, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20140083
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    Cited by:

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    2. De Paola, Maria & Scoppa, Vincenzo, 2015. "Gender Differences in Reaction to Psychological Pressure: Evidence from Tennis Players," IZA Discussion Papers 9315, Institute of Labor Economics (IZA).
    3. Bordunos, A. & Kokoulina, L. & Ermolaeva, L., 2015. "Role of enterprise gamified system in fostering innovation capacity: A field experiment," Working Papers 6420, Graduate School of Management, St. Petersburg State University.
    4. Thomas Buser & Anna Dreber, 2016. "The Flipside of Comparative Payment Schemes," Management Science, INFORMS, vol. 62(9), pages 2626-2638, September.

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    More about this item

    Keywords

    competition; challenge seeking; career decisions; laboratory experiment; gender;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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