Friday, February 15, 2013
Stefan Legge & Lukas Schmid (both of University of St. Gallen), The Role of Rankings, Big Shots, and Random Successes:
Does the relative position in a hierarchy or a ranking affect future performance? And, to what extent does a one-time great success affect future performance? In this paper, we propose a highly tractable theoretical model and analyze a rich set of data on alpine skiing tournaments for the period of 1992--2011 to evaluate the long-term impact of a higher ranking position, a victory or podium, as well as a top six classification. Using a regression discontinuity approach, the paper provides evidence of substantial performance differences in the long run as a result of the present relative position. Victories, podium finishes, as well as a higher position between rank 6 and 15 are all found to be significantly performance-enhancing.