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Home | Events Archive | How Success Breeds Success

How Success Breeds Success

  • Series
  • Speaker(s)
    Lionel Page (Queensland University of Technology, Australia)
  • Field
    Behavioral Economics
  • Location
    UvA - E-building, Roetersstraat 11, Room: tba
  • Date and time

    February 06, 2019
    16:00 - 17:15

We study whether and how success increases the chance of subsequent success using a real-effort laboratory experiment. We identify the causal effect of winning in a simple dynamic contest (best-of-three) using the random component of a stochastic contest success function that determines the winner of each round. We find a positive effect of an initial success on subsequent performance. Replacing either the first round or the last round of the contest with a die selecting the winner at random, we disentangle two competing explanations of the positive effect: strategic thinking and psychological effect of winning. Our results clearly support the existence of a psychological effect of winning. On the contrary, we do not find evidence that strategic thinking can explain the effect of winning. Varying the amount of feedback provided in contest, we find that the psychological effect is likely driven by improved self-confidence after experiencing a success. We suggest that contest models need to venture beyond the framework of games with complete information to explain behaviour in dynamic contests.