Monday, April 5, 2010
From the playing field to the boardroom, when one competitor is clearly the best, the others don't step up their game—they give up. As Tiger Woods returns to golf, Jonah Lehrer looks at the nature of competition. ...
According to a paper by Jennifer Brown, an applied macroeconomist at the Kellogg School of Management at Northwestern University, Mr. Woods is such a dominating golfer that his presence in a tournament can make everyone else play significantly worse. Because his competitors expect him to win, they end up losing; success becomes a self-fulfilling prophecy.
Ms. Brown argues that the superstar effect is not just relevant on the golf course. Instead, she suggests that the presence of superstars can be "de-motivating" in a wide variety of competitions, from the sales office to the law firm. "Most people assume that competing against an elite performer makes everyone else step up their game and perform better," Ms. Brown says. "But the Tiger Woods data demonstrate that the opposite can also occur. It doesn't matter if the superstar is an athlete or a corporate vice president. After all, why should we invest a lot of energy in a tournament that we're probably going to lose?" ...
Ms. Brown cites the competition among newly hired associates at a law firm as another example of a nonlinear incentive structure. "The lawyers know that most of them won't be retained," she says. "They either win the competition, or they're let go." The problem with such competitions is that when a superstar is present—when one of the legal associates is perceived as the clear favorite—every other lawyer is less likely to exert maximum effort. Because we assume we're going to lose, we decide to cut our losses, which leads to an overall decrease in employee effort. The cutthroat competition made people less competitive.
The same phenomenon seems to also affect students taking the SAT. In a paper released last year, researchers from the University of Michigan and the University of Haifa compared average SAT scores with the average number of students in test-taking venues in all 50 states, and found that students who took the SAT in larger groups did worse. They concluded that the mere knowledge of their competitors—the sight of all of those other students scratching in their answers in the same room—decreased motivation.
The paper is Quitters Never Win: The (Adverse) Incentive E¤ects of Competing with Superstars. Here is the abstract:
Managers use internal competition to motivate worker e¤ort, yet economic theory suggests that the benefits of competition may depend critically on workers' relative abilities -- large di¤erences in skill may reduce competitors' efforts. This paper uses panel data from professional golfers and finds that the presence of a superstar in a rank-order tournament is associated with lower competitor performance. On average, higher-skill PGA golfers' first-round scores are approximately 0.2 strokes higher when Tiger Woods participates, relative to when Woods is absent. The overall superstar e¤ect for tournaments is approximately 0.8 strokes. The adverse superstar effect increases when Woods is playing well and disappears during Woods's weaker periods. There is no evidence that reduced performance is due to "riskier" play.
What is the effect of superstars on their law faculty colleagues? In light of this morning's post, what is the impact on a law faculty of having one of the most highly cited (Erwin Chemerinsky (UC-Irvine), Richard Epstein (Chicago/NYU), Ronald Dworkin (NYU), Eric Posner (Chicago), Mark Tushnet (Harvard), Laurence Tribe (Harvard)) or most downloaded (Lucian Bebchuck (Harvard), Dan Solove (George Washington), Bernard Black (Northwestern), Cass Sunstein (Harvard), Mark Lemly (Stanford), William Landes (Chicago)) law professors as a colleague?
Is there a "superstar effect" in the tax faculty world? What is the impact on a tax faculty of having one of the most highly cited (Louis Kaplow (Harvard), Michael Gratez (Columbia), Dan Shaviro (NYU), David Weisbach (Chicago), Edward McCaffery (USC), Reuven Avi-Yonah (Michigan)) or most downloaded (Louis Kaplow (Harvard), Reuven Avi-Yonah (Michigan), Vic Fleischer (Colorado). James Hines (Michigan), Chris Sanchirico (Penn), Dennis Ventry (UC-Davis)) tax professors as a colleague?