Decision Making in Competitions

Abstract

This dissertation consists of three distinct papers (chapters) that explore various factors that affect one's decision making in a competitive environment and whether or not gender differences exist in such decision making by conducting experiments. Competitions are ubiquitous. Athletes compete with each other to win a championship. Everyone in the labor market compete with each other for a job offer or promotion. Firms compete with others to get a higher market share or profit. Moreover, it has been shown that many types of gender differences exist in competitive environments (Niederle and Vesterlund, 2007; Bertrand and Hallock, 2001; Vallerand and Reid, 1988; Shurchkov, 2012). In particular, we study how prior interaction with a competitor and whether or not observing that the majority of the audience bet on an individual to win influences one's competitiveness and performance. In addition, we test if gender differences exist in how the two factors affect one's competitiveness and performance. Furthermore, we examine how self-promoters cooperate when the ability varies among teammates and teams. In the first chapter, we test whether men and women differ in their willingness to challenge a competitor in response to a prior transgression. A laboratory experiment is conducted, in which a player can choose to behave unfairly toward another. The other player may then challenge the first to a contest. We investigate the extent to which previous interactions can explain individual differences in tournament initiation decisions. The results show that men, but not women, tend to challenge a competitor more when the prior outcome is unfair and the unfairness occurred through the competitor's intentional choice. In contrast, unfair outcomes that occur by chance do not influence the decision to challenge others. The second chapter investigates the impact of sports betting legalization on players’ competitiveness and performance. In particular, lab experiments are used to examine how tournament entry decisions are affected when players are exposed to the betting odds, such as favorite and underdog. One experimental treatment had a betting market that did not reveal the betting results to the players, and the other had a betting market that did reveal the betting results to the players before the competition. The results show that the favorites and underdogs behave the same when the betting results are not revealed, but the favorites enter tournament significantly more than the underdogs when the betting results are revealed. This is especially the case for male leagues. Moreover, the favorites win the game significantly more than the underdogs only when the betting results are revealed. In the third chapter, we test whether having a higher ability player on one's team or an opposing team affects limelight-seekers' cooperation. A laboratory experiment is conducted, in which two teams compete for a team competition cash prize, and teammates compete for an individual competition cash prize. We investigate how the magnitude of the ability gap can explain individual differences in cooperation. The results show that players cooperate less when competing with a team that has a player with higher ability and the ability gap is great. However, the cooperation decisions of the teammates of the players with higher ability is not dependent on the magnitude of the skill gap.