The Oxford Handbook of the Psychology of Competition
OXFORD LIBRARY OF PSYCHOLOGY
AREA EDITORS:
Clinical Psychology
David H. Barlow
Cognitive Neuroscience
Kevin N. Ochsner and Stephen M. Kosslyn
Cognitive Psychology
Daniel Reisberg
Counseling Psychology
Elizabeth M. Altmaier and Jo-Ida C. Hansen
Developmental Psychology
Philip David Zelazo
Health Psychology
Howard S. Friedman
History of Psychology
David B. Baker
Methods and Measurement
Todd D. Little
Neuropsychology
Kenneth M. Adams
Organizational Psychology
Steve W.J. Kozlowski
Personality and Social Psychology
Kay Deaux and Mark Snyder
The Oxford Handbook of the Psychology of Competition
Edited by Stephen M. Garcia, Avishalom Tor, and Andrew J. Elliot
Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries.
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Library of Congress Control Number: 2023949095
ISBN 978–0–19–006080–0
DOI: 10.1093/oxfordhb/9780190060800.001.0001
Printed by Integrated Books International, United States of America
CONTENTS
List of Contributors ix
I • Introduction
1. What Is the Psychology of Competition? 3
Stephen M. Garcia, Avishalom Tor, and Andrew J. Elliot
2. Competition in Psychology and Experimental Economics 9
Uriel Haran and Yoella Bereby-Meyer
II • Biological Approaches
3. Examination of the Potential Functional Role of Competition-Induced Testosterone Dynamics 39 Tracy-Lynn Reside, Brittney A. Robinson, and Justin M. Carré
4. Biological Sex Differences and Competition 55
Alicia Salvador, Vanesa Hidalgo, Raquel Costa, and Esperanza González-Bono
5. Psychobiology of Competition: A Review of Men’s Endogenous Testosterone Dynamics 101
Brian M. Bird, Lindsay Bochon, Yin Wu, and Samuele Zilioli
6. Neuroscience and Competitive Behavior 117
Michela Balconi and Laura Angioletti
7. The Evolution of Competition: A Darwinian Perspective 134
Ben Winegard and David Geary
III • Motivational and Emotional Approaches
8. Competitive Arousal: Sources, Effects, and Implications 163
Gillian Ku and Marc T. P. Adam
9. Motivational Dynamics Underlying Competition: The Opposing Processes Model of Competition and Performance 189
Kou Murayama, Andrew J. Elliot, and Mickaël Jury
10. Competition and Goal Pursuit: A Temporally Dynamic Model 210
Szu-chi Huang and Stephanie Lin
11. Intrinsic Motivation, Psychological Needs, and Competition: A Self-Determination Theory Analysis 240
Richard M. Ryan and Johnmarshall Reeve
12. Envy: A Prevalent Emotion in Competitive Settings 265
Ronit Montal-Rosenberg and Simone Moran
IV • Cognitive and Decision-Making Approaches
13. Judgmental Biases in the Perception of Competitive Advantage: On Choosing the Right Race to Run 287
David Dunning
14. Social Dilemmas: From Competition to Cooperation 305
Poonam Arora, Tamar Kugler, and Francesca Giardini
15. Self-Evaluation in Competition Pools 332
Mark D. Alicke, Yiyue Zhang, Nicole B. Stephenson, and Ethan Zell
16. On Predicting and Being Predicted: Navigating Life in a Competitive Landscape Full of Mind Readers 350
Oscar Ybarra, Kimberly Rios, Matthew C. Keller, Nicholas Michalak, Iris Wang, and Todd Chan
17. Competition and Risk-Taking 373
Sandeep Mishra, Cody Fogg, and Jeff Deminchuk
V • Social-Personality and Organizational Approaches
18. Social Comparison and Competition: General Frameworks, Focused Models, and Emerging Phenomena 401
Stephen M. Garcia and Avishalom Tor
19. Psychology of Rivalry: A Social-Cognitive Approach to Competitive Relationships 422
Benjamin A. Converse, David A. Reinhard, and Maura M. K. Austin
20. The Psychology of Status Competition within Organizations: Navigating Two Competing Motives 444
Sarah P. Doyle, Sijun Kim, and Hee Young Kim
21. Social Identity and Intergroup Competition 476
Sucharita Belavadi and Michael A. Hogg
22. Benefits and Drawbacks of Trait Competitiveness 496
Craig D. Parks
23. Gender Differences in the Psychology of Competition 514
Kathrin J. Hanek
VI • Competition in Context
24. Ready, Steady, Go: Competition in Sport 545
Maria Kavussanu, Andrew Cooke, and Marc Jones
25. Competition in Education 569
Fabrizio Butera, Wojciech Świątkowski, and Benoît Dompnier
26. Mindfulness, Competition, and Sports Psychology: A Phenomenological Perspective 598
Ramaswami Mahalingam
27. Hide a Dagger Behind a Smile: A Review of How Collectivistic Cultures
Compete More Than Individualistic Cultures 611
Kaidi Wu and Thomas Talhelm
Index 643
CONTRIBUTORS
Marc T. P. Adam
Associate Professor in Computing and IT, School of Information and Physical Sciences, University of Newcastle
Mark D. Alicke
Professor of Psychology, Ohio University
Laura Angioletti
Post-Doctoral Researcher, International Research Center for Cognitive Applied Neuroscience (IrcCAN), Department of Psychology, Catholic University of the Sacred Heart
Poonam Arora
Associate Dean and Professor of Management, Quinnipiac University
Maura M. K. Austin
Graduate Student, Department of Psychology, University of Virginia
Michela Balconi
Professor of Psychophysiology and Cognitive Neuroscience, Director of International Research Center for Cognitive Applied Neuroscience (IrcCAN), Head of the Research Unit in Affective and Social Neuroscience, Department of Psychology, Catholic University of the Sacred Heart
Sucharita Belavadi
Assistant Professor, Jindal Institute of Behavioural Sciences, O. P. Jindal Global University
Yoella Bereby-Meyer
Professor of Psychology, Department of Psychology, Ben-Gurion University of the Negev
Brian M. Bird
Simon Fraser University
Lindsay Bochon
PhD Candidate, Psychology Department, Simon Fraser University
Fabrizio Butera
Professor of Social Psychology, Institute of Psychology, University of Lausanne
Justin M. Carré
Professor of Psychology, Nipissing University
Todd Chan
PhD Candidate, University of Michigan
Benjamin A. Converse
Associate Professor of Public Policy and Psychology, University of Virginia
Andrew Cooke
Senior Lecturer in Performance Psychology, Institute for the Psychology of Elite Performance (IPEP), School of Human and Behavioural Sciences, Bangor University
Raquel Costa Lecturer, Department of Psychobiology, Faculty of Psychology and Speed Therapy, University of Valencia
Jeff Deminchuk
Graduate Student, University of Regina
Benoît Dompnier
Senior Lecturer, Institute of Psychology, University of Lausanne
Sarah P. Doyle
Assistant Professor of Management and Organizations, University of Arizona Eller College of Management
David Dunning
Professor of Psychology, University of Michigan
Andrew J. Elliot
Professor of Psychology, University of Rochester
Cody Fogg
Department of Psychology, University of Regina
Stephen M. Garcia
Professor of Organizational Behavior, Graduate School of Management, University of California, Davis
David Geary
Curators’ Distinguished Professor, Psychological Sciences, University of Missouri
Francesca Giardini
Associate Professor of Sociology, Department of Sociology, University of Groningen
Esperanza González-Bono
Professor of Psychobiology, Psychobiology Department, Psychology Faculty, University of Valencia
Kathrin J. Hanek
Associate Professor of Management, Department of Management and Marketing, University of Dayton
Uriel Haran
Senior Lecturer of Organizational Behavior, Department of Management, Ben-Gurion University of the Negev
Vanesa Hidalgo
Associate Professor of Psychobiology, Psychology and Sociology Department, University of Zaragoza
Michael A. Hogg
Professor of Social Psychology, Claremont Graduate University
Szu-chi Huang
Associate Professor of Marketing and R. Michael Shanahan Faculty Scholar, Stanford Graduate School of Business, Stanford University
Marc Jones
Professor of Psychology, Department of Psychology, Manchester Metropolitan University
Mickaël Jury
Assistant Professor of Social Psychology of Education, INSPé, Université Clermont-Auvergne
Maria Kavussanu
School of Sport, Exercise and Rehabilitation Sciences, University of Birmingham
Matthew C. Keller
Professor, Psychology & Neuroscience, University of Colorado
Hee Young Kim
Associate Professor, Management Department, Rider University
Sijun Kim
Assistant Professor, Department of Management, Texas A&M University
Gillian Ku
Professor of Organisational Behaviour, London Business School
Tamar Kugler
Associate Professor of Management and Organizations, University of Arizona
Stephanie Lin
Assistant Professor of Marketing, INSEAD
Ramaswami Mahalingam
Barger Leadership Institute Professor, Department of Psychology, University of Michigan
Nicholas Michalak
PhD Candidate, University of Michigan
Sandeep Mishra
Associate Professor of Management, Lang School of Business and Economics, University of Guelph
Ronit Montal-Rosenberg
Postdoctoral Fellow, The Federmann School of Public Policy, The Hebrew University of Jerusalem
Simone Moran
Associate Professor, Department of Management, Guilford
Glazer Faculty of Business and Management, Ben-Gurion University of the Negev
Kou Murayama
Professor, Hector Research
Institute of Education Sciences and Psychology, University of Tübingen
Craig D. Parks
Professor of Psychology, Washington State University
Johnmarshall Reeve
Professor, Institute for Positive Psychology and Education, Australian Catholic University
David A. Reinhard
University of Massachusetts Amherst
Tracy-Lynn Reside
Nipissing University
Kimberly Rios
Professor of Psychology, Ohio University
Brittney A. Robinson
Nipissing University
Richard M. Ryan
Professor, Institute for Positive Psychology and Education, Australian Catholic University
Alicia Salvador Professor of Psychology, University of Valencia
Nicole B. Stephenson
Ohio University
Wojciech Świątkowski University of Lausanne
Thomas Talhelm
Associate Professor of Behavioral Science, University of Chicago Booth School of Business
Avishalom Tor
Professor of Law and Director, Notre Dame Program on Law and Market Behavior, Notre Dame Law School (ND LAMB)
Iris Wang
Graduate Student, University of Michigan
Ben Winegard
Assistant Professor of Psychology, Hillsdale College
Kaidi Wu
Postdoctoral Scholar, University of California, San Diego, Rady School of Management
Yin Wu
Associate Professor, Department of Applied Social Sciences, Shenzhen University
Oscar Ybarra
Professor of Business Administration, University of Illinois
Ethan Zell
Associate Professor of Psychology, UNC Greensboro
Yiyue Zhang
Graduate Research, Department of Psychology, Ohio University
Samuele Zilioli
Associate Professor, Department of Psychology, Wayne State University
Introduction PART I
1 What is the Psychology of Competition?
Stephen M. Garcia, Avishalom Tor, and Andrew J. Elliot
Abstract
Common definitions of competition tend to emphasize its objective features, which produce a zero-sum interaction whereby the outcome establishes winners and losers based on more than mere chance. The psychological study of competition, however, is primarily concerned with individuals’ behavior and their subjective feelings, perceptions, motivations, and intentions. As such, this chapter defines competition more broadly to include all manifestations of individual competitive behavior or competitive psychological state, even when they occur outside of overtly competitive institutional arrangements or explicitly competitive interactions. The authors then outline the chapters in this volume to showcase the study of competition across the broad spectrum of psychology.
Competition is a powerful and prevalent presence in daily life, and this volume focuses on the psychology of this important topic. While the psychological perspective on competition overlaps with perspectives from other fields, particularly economics (see Haran & Bereby-Meyer, this volume), it also differs substantially, as the psychological experience of competition is an individual and subjective one. This introductory chapter addresses definitional issues regarding competition and provides an overview of this volume that showcases the study of competition across the broad spectrum of psychology, including biopsychology, evolutionary psychology, neuroscience, motivation, emotion, cognitive psychology, decision making, social psychology, personality psychology, organizational psychology, educational psychology, sports psychology, and more. While the psychological study of competition was initiated several generations ago (Triplett, 1898; Deutsch, 1949; Festinger, 1954; Greenberg, 1932), it has more recently garnered new and vigorous attention (e.g., Dunning et al., 2003; Garcia et al., 2006; Kilduff et al., 2010; Murayama & Elliot, 2012; Schurr & Ritov, 2016; Stanne et al., 1999). This volume seeks to advance
the psychological study of competition further by bringing together and organizing the literature in a first-of-its-kind anthology.
What is Competition from a Psychological Perspective?
“Competition” is a widely used term, bearing a broad range of potential meanings, with typical dictionary definitions focusing on the act or process of individuals vying for outcomes, or, alternatively, on its institutional setting that pits competitors against one another (Garcia et al., 2020). Common definitions of competition thus tend to emphasize its objective features, which produce a zero-sum interaction whereby the outcome establishes winners and losers (Bronson & Merryman, 2014; Roth, 2016) based on more than mere chance. Given the overt nature of such competitions, moreover, the individuals or groups involved usually perceive themselves as engaging in a competition. This common form of competition includes myriad and varied institutional arrangements, such as sports leagues and other athletic contests, online games, school admissions, job markets, promotion and salary pools, elections, bids, auctions, resource dilemmas, and more.
The psychological study of competition, however, is primarily concerned with individuals’ behavior and their subjective feelings, perceptions, motivations, and intentions. For this reason, this handbook defines competition more broadly to include all manifestations of individual competitive behavior or competitive psychological state, even when they occur outside of overtly competitive institutional arrangements or explicitly competitive interactions. After all, people can feel competitive or act competitively in circumstances that are not inherently, structurally competitive. For instance, people with a shared history of rivalry may view as competitive routine interactions and situations that are objectively non- competitive— that is, circumstances in which their respective outcomes are not negatively linked (e.g., Garcia & Tor, this volume).
At other times, one party may be competitive towards another, engaging in oneupmanship to achieve a superior outcome or experiencing subtle positional concerns (Graf-Vlachy et al., 2012), even when the perceived competitor is wholly unaware that a competition is taking place. To illustrate, imagine two guests staying in a high-rise hotel with a scenic view entering the same elevator. While one may perceive the elevator merely as a means for getting to the desired floor, the other guest may see the elevator ride as a competition to determine who is staying on a higher, supposedly more prestigious, floor. Such positional concerns may be idiosyncratic, and occasionally limited to single instances (e.g., competing to get a better parking spot at the mall). But an important marker of these implicit competitions is their highly subjective nature that is capable of converting even an explicitly non-competitive situation into a perceived competition (Reese et al., 2022).
Finally, irrespective of its cause, perceived competition can manifest in a variety of behavioral and psychological outcomes. Some of these manifestations are obvious, as when one tackles an opponent in football or tries to run faster than one’s competitors in a relay race. Yet other forms of competitive behavior are more stealthy or difficult to identify, such as when an actor dissembles (e.g., arguing that a particular job candidate is superior to another while holding the opposite belief; Garcia et al., 2010) or when seemingly cooperative behavior is driven more by a desire to signal one’s competitive advantage (Greenberg, 1932). In short, competition is not only ubiquitous but is also rich with variety and complexity, and so is its psychological study.
The Psychological Study of Competition
Following our more expansive, psychologically driven definition of competition and its manifestations, the present volume provides a broad, even comprehensive, view of competition across the field of psychology, dividing the literature into four groups: Biological Approaches, Motivation and Emotion Approaches, Cognitive and Decision-Making Approaches, and Social-Personality and Organizational Approaches. In the final section, we also provide a psychological perspective on competition in specific domains, including sports, education, and culture.
We begin with Biological Approaches because biological processes affect the psychology of competition in the most physical, basic ways. While psychology generally reflects the relationship between brain and behavior, the biological approach highlights how the physical processes of the brain affect competitive behaviors. For example, Reside, Robinson, and Carré examine the social neuroendocrinological underpinnings of human competition, showing how competitive situations trigger increases in testosterone, which in turn is linked to competitive, aggressive behavior and risk-taking processes. Bird, Bochon, Wu, and Zilioli further chart the cyclical effects of testosterone in competition, reviewing the literature showing that testosterone is both a precursor and consequence of a wide variety of competitive processes among men. Salvador, Hidalgo, Costa, and González-Bono further unpack the biological sex differences in competition, linking brain structures, neurotransmitters, and the neuro-endocrine-immune system to sex differences across a variety of competitive behaviors.
Offering a neuroscience perspective on competition, Balconi and Angioletti explain how advances in hyperscanning areas of the brain and other methodological techniques have begun to shed light on how various brain regions are associated with different forms of competitive behavior. Finally, Winegard and Geary use an evolutionary perspective on the psychology of competition to explicate how early humankind’s primordial challenges of survival and propagation shaped the kinds of competitive behavior observed today.
Building upon these biological approaches, the volume next explores Motivational and Emotional Approaches toward understanding the psychology of competition. Ku and Adam explore the basic influence of arousal on a host of competitive behaviors, including its origins and downstream consequences. Murayama, Elliot, and Jury then present an opposing processes model of competition and performance, showing how competition can induce both approach motivation and avoidance motivation, which have different influences on performance outcomes. Huang and Lin review the well-established literature on goals and competition, as well as present the most recent advances in this field. Ryan and Reeve examine the relationship between intrinsic motivation and competition and use self-determination theory to explain the seeming paradox that competition can invoke yet also undermine intrinsic motivation. Finally, Montal-Rosenberg and Moran explore the role of envy as determinants and consequences of competitive feelings and behavior.
The psychology of competition can also be understood through Cognitive and Decision Making Approaches. For example, Dunning reviews biases that individuals have when judging their own performance relative to others, including better-than-average effects in general and the Dunning-Kruger Effect specifically. Focusing on the interdependent decisions to cooperate versus compete, Arora, Kugler, and Giardini explore mixedmotives in social dilemma games and offer a framework for understanding contextual and norm-based influences on decisions to cooperate. Alicke, Zhang, Stephenson, and Zell then offer an analysis of how competitors evaluate themselves in competition pools, including how local comparisons carry more weight than broader and larger comparisons, even if the latter are more diagnostically useful to the self. Ybarra, Rios, Keller, Michalak, Wang, and Chan then review how competitors become more or less predictable to others depending on whether the social landscape is cooperative or competitive. Finally, Mishra, Fogg, and Deminchuk review the topic of competition and risk-taking, addressing the question of how competition motivates risk-taking behavior.
Building upon the biological, motivational, and cognitive perspectives, SocialPersonality and Organizational Approaches to competition broadly emphasize how individual competitive behavior depends on the person and the situation. Parks provides a comprehensive review of competitiveness as a personality trait, while Garcia and Tor explore the relationship between social comparison and competition, reviewing two general models in this area, and showing how these models both help organize a large and diverse literature and highlight promising hypotheses for further study. Converse, Reinhard, and Austin then offer a focused social-cognitive model on the psychology of rivalry that distinguishes rivals from mere competitors and explains both the antecedents of rivalry and its psychological consequences. Doyle, S. Kim, and H. Y. Kim contribute to the social and organizational approach by reviewing the literature on status competition in groups and they link these status competitive processes to broader status hierarchies. Through the lens of social identity and self-categorization theories, Belavadi and
Hogg review the intergroup competition literature, which has particularly deep roots in the study of social and organizational psychology. Finally, Hanek examines gender as an individual difference factor, reviewing how women and men differ in their competitive preferences and behavior across social and organizational contexts.
The final section examines the psychology of competition in specific contexts. Kavussanu, Cook, and Jones review the competition literature in sports, defining different types of competition and discussing factors that affect a host of outcome measures, including performance, enjoyment, anxiety, choking, and pro- and anti-social behaviors. Similarly, Butera, Świątkowski, and Dompnier present a perspective on competition in education, highlighting the benefits, drawbacks, and unanswered questions regarding competitive processes and various aspects of the learning experience. Offering a complementary mindfulness perspective, Mahalingam explains how mindfulness can be incorporated into competitive processes, showing that it can be used to reap the positive benefits of competitiveness. Last, taking an even wider perspective on the psychology competition, Wu and Talhelm review key differences in the construal, meaning, and manifestation of competitive processes across broad swaths of Eastern versus Western cultures.
We believe that this compilation of chapters represents an important contribution to the literature by providing a one-stop, comprehensive, resource for all those interested in the psychology of competition, researchers, and practitioners alike. Our hope is that this Oxford Handbook of the Psychology of Competition will advance this burgeoning multidisciplinary area and inspire even more scholars to join the highly promising efforts of extant researchers in this field.
References
Bronson, P., & Merryman, A. (2014). Top dog: The science of winning and losing. Twelve Books. Deutsch, M. (1949). An experimental study of the effects of co-operation and competition upon group process. Human Relations 2(3), 199–231.
Dunning, D., Johnson, K., Ehrlinger, J., & Kruger, J. (2003). Why people fail to recognize their own competence. Current Directions in Psychological Science 12, 83–87.
Festinger, L. (1954). A theory of social comparison processes. Human Relations 7(2), 117–140.
Garcia, S. M., Reese, Z., & Tor, A. (2020) Social comparison before, during, and after the competition. In J. Sul, L. Wheeler, and R. Collins (Eds.), Social comparison, judgment and behavior (pp. 105–142). Oxford University Press.
Garcia, S.M., Song, H., & Tesser, A. (2010). Tainted recommendations: The social comparison bias. Organizational Behavior and Human Decision Processes 113, 97–101.
Garcia, S. M., Tor, A., & Gonzalez, R. (2006). Ranks and rivals: A theory of competition. Personality and Social Psychology Bulletin 32(7), 970–982. https://doi.org/10.1177/0146167206287640
Graf-Vlachy, L., König, E., & Hungenberg, H. (2012). Debiasing competitive irrationality: How managers can be prevented from trading off absolute for relative profit. European Management Journal 30, 386–403.
Greenberg, P. J. (1932). Competition in children: An experimental study. American Journal of Psychology 44, 221–248.
Kilduff, G. J., Elfenbein, H. A., & Staw, B. M. (2010). The psychology of rivalry: A relationally dependent analysis of competition. Academy of Management Journal 53(5), 943–969.
Murayama, K., & Elliot, A. J. (2012). The competition–performance relation: A meta-analytic review and test of the opposing processes model of competition and performance. Psychological Bulletin 138(6), 1035–1070.
Reese, Z. A., Garcia, S. M., & Edelstein, R. S. (2022). More than a game: Trait competitiveness predicts motivation in minimally competitive contexts. Personality and Individual Differences 185, 111262.
Roth, A. (2016). Who gets what—and why: The new economics of matchmaking and market design. Eamon Dolan/Mariner Books
Schurr, A., & Ritov, I. (2016). Winning a competition predicts dishonest behavior. Proceedings of the National Academy of Sciences 113(7), 1754–1759. https://doi.org/10.1073/pnas.1515102113.
Stanne, M. B., Johnson, D. W., & Johnson, R. T. (1999). Does competition enhance or inhibit motor performance: A meta-analysis. Psychological Bulletin 125, 133–154.
Triplett, N. (1898). The dynamogenic factors in pacemaking and competition. American Journal of Psychology 9, 507–533.
2 Competition in Psychology and Experimental Economics
Uriel Haran and Yoella Bereby-Meyer
Abstract
Competition is a fundamental phenomenon in human behavior and a key topic of interest for psychologists and economists alike. Both psychology and economics strive to better understand behavior in competitive environments, but they differ in their research objectives, theoretical perspectives, and empirical methods. Economics typically adopts a normative approach, assuming that agents make rational decisions that balance the tradeoff between the costs of competing and the benefits associated with winning. Economists view competition as a class of incentive structures and investigate the effects of comparative reward schemes on behavior and performance. Psychology adopts a more descriptive approach. Psychologists are interested in the cognitive, affective, and motivational processes that affect decision making. They examine the interpersonal effects of competition and compare them with other social situations. In this chapter, the authors review selected literature on competition in experimental economics and psychology, exploring two common research areas. One is rank-order, effort-based tournaments, by which experimental economists study the effects of various incentive structures on effort and performance, whereas social psychologists examine processes of social comparison. The second is common value auctions and the winner’s curse. The authors discuss how research in economics and psychology examine the winner’s curse, explanations for the phenomenon, and recommendations to overcome it. Finally, the authors outline possible directions for mutual enrichment for scholars interested in competition. Psychologists can benefit from the precise definitions present in economic experiments, whereas economists can use the insights on the underlying processes of competitive attitudes and behavior offered by research in psychology.
Key Words: competition, experimental economics, social psychology, winner’s curse, common value auction, social comparison, tournaments
The study of social behavior involves various scientific disciplines, including psychology, sociology, political science, and anthropology, among others. These disciplines address similar social issues by applying different foci of interest, theoretical approaches, and methodological tools. Competition is no different. It is inherently a social behavior which involves decision making on the part of two or more actors who need to consider the choices of their actions in view of their conficting interests. In this chapter, we refer to
competition as encompassing both the process of competitive behavior and the institutional setting in which a competitive situation takes place (Garcia et al., 2020).
The two main disciplines in the social sciences that study competitive behavior are psychology and economics. In this chapter, we consider the questions these two disciplines ask in their attempt to understand behavior in competition, and the different ways in which they address these questions. The approaches adopted by psychology and economics are similar in certain respects, but they differ in some fundamental parts. Understanding these differences can help researchers in each discipline appreciate the contributions of the other, use its insights to complement their work, and achieve a synthesis of the knowledge gained in each.
Conceptualizing Competition
Competition is as basic and important a phenomenon in human behavior as it is ubiquitous. Animals compete for food and shelter. Firms compete for market share. People compete for land, prestige, and power. Academics compete for grants and publication space. Students compete for scholarships and class ranking. Competition seems to be inseparable from almost every facet of human experience.
Brown et al. (1998) proposed three ways to conceptualize competition. The first is structural competition, referring to situations in which two or more people compete for rewards. The rewards can be either tangible or intangible, as long as they are sufficiently scarce to prevent everyone from enjoying them equally (Kohn, 1992). For one person to win and enjoy a greater share of rewards, another must lose and settle for less. The second conceptualization is trait competitiveness, an aspect of one’s personality that increases the enjoyment of competing, the desire to win, and the ambition to be better than others (Spence & Helmreich, 1983). Finally, perceived environmental competition refers to the feeling that one is competing with another, even if no formal competitive structure is in place. In the present chapter, we focus primarily on structural competition and on social comparison processes that are integral to behavior in a competitive structure.
Competition is an important topic in both psychology and economics, but the two disciplines diverge on several essential attributes. Specifically, they differ in their objectives, theoretical perspectives, and the empirical methodologies they use to address their questions about behavior in competitive settings. This chapter aims to demonstrate the differences between experimental economics and psychology in their research on competition, and to highlight the features and insights that scholars in the two disciplines can gain from each other.
Fundamental Differences and Commonalities between Psychology and Economics
The relation between economics and psychology has been the topic of discussion for a long time (e.g., Simon, 1986; Rabin, 1998; Ariely & Norton, 2007). Both seek to understand
human behavior, but they do so from different perspectives, and have different assumptions about how people act. As Rabin (1998) pointed out, economics “has conventionally assumed that individuals have stable and coherent preferences, and that they rationally maximize those preferences. Given a set of options and probabilistic beliefs, a person is assumed to maximize the expected value of a utility function, U(x).” For economists, the essential elements to be abstracted are derived from some general normative theory based on the assumption that behavior is driven by utility maximization. Economists, therefore, emphasize the incentive structure of the situation (i.e., the costs and benefits of different outcomes that apply to various participants in the situation) and the information available to participants that is relevant to their decisions. Psychology, on its part, seeks to develop descriptive models of human behavior. To this end, it focuses on the cognitive, motivational, and affective factors that help gain a better understanding of the underlying mechanisms of decision making and behavior.
Unlike economics, social psychology is not committed to a normative model, and its experiments often do not examine concrete predictions derived from such a model. Psychologists investigate people’s decisions in given situations; therefore, they often use cover stories, confederates, and even deception to simulate real-life conditions as closely as possible. The requirements in economic research are somewhat different, and the important criterion is the correspondence to a theoretical, normative model or to the incentive structure of the environment. Great stress is placed on the need to control for any factor that can affect behavior, according to the theoretical model. Therefore, there is strong reluctance in economics research to employ any form of deception. This reluctance stems from the assumption that if participants in experiments believe that the information they receive is not valid, their responses might be limited to their beliefs regarding the experiment, rather than to what the incentive structure of the experiment represents in real life (Ariely & Norton, 2007).
In the last three decades, a new branch of economics has evolved, known as behavioral economics. Research in this field concerns the concrete actions carried out in situations involving multiple interacting players. Behavioral economics expands analytical game theory by adding to it emotions, mistakes, limited foresight, conjectures about others’ intelligence, and learning. It uses psychological regularities to suggest ways to weaken rationality assumptions and to extend theory (Camerer, 2003).
How Psychology and Experimental Economics Study Competition
Competition in economics is mainly about markets. A market, in the broadest sense of the term, refers to any context in which goods, services, and any other type of resource are exchanged (Pearce, 1994). Competition functions as a mechanism and a set of rules that can allow the market to operate efficiently, by enabling the allocation of productive resources to their most highly valued uses. Sellers compete to attract favorable offers from prospective buyers, potential buyers compete to obtain good offers from suppliers,
and workers try to outperform each other in the pursuit of prizes, promotions, and recognition.
Research in the field of industrial organization (IO) in economics tended to deal mainly with market deviations from idealized conditions of perfect competition (Einav & Levin, 2010). Experimental studies examine competitions through auctions, lotteries, and tournaments. A subfield of experimental economics deals with experimental studies related to IO. The detailed review of the IO literature is beyond the scope of the present chapter, where we focus on common-value auctions, and in particular, on the winner’s curse phenomenon, and on rank-order tournaments.
Auctions are a common mechanism for setting the price of a commodity or service. Economic approaches to auctions are based on a large theoretical and experimental literature that compares different kinds of items (e.g., private value vs. common value) and mechanisms (e.g., English, Dutch, first-price, and second-price sealed-bid auctions) with respect to the revenue they generate (for a review, see Kagel, 1995; Ku et al., 2005). One way of studying competition in experimental economics is through auction games, where individuals compete by investing monetary resources to buy a commodity (i.e., to win a prize). Tournaments compare competitors on such dimensions as effort, output, and performance. The theoretical components they test often have to do with the incentives provided to players for doing their work (e.g., different prize structures, rank orders, and pay dispersions). Psychological research on competition uses similar mechanisms to those discussed above. Studies use auction settings to investigate cognitive biases and other phenomena in judgment and decision making, and tournaments to explore motivation, selfassessment, social cognition, and affect.
To date, the study of competition in social psychology and in experimental economics appears to have been conducted in parallel, with too few points of contact. Although parallel research of the same questions in different disciplines may create redundancies, many of the findings in the two disciplines are complementary, and most insights from one discipline prove useful for the other. In general, psychology has a broader view of competition, and considers factors beyond market structure, incentive types, effort, and outcomes. It is sensitive to affective, motivational, and perceptual processes that can explain behavior and competitive outcomes but are often overlooked in economics. At the same time, psychologists can learn from the economists’ precise and profound understanding of competitive structures. Most studies in psychology operationalize competition by simply setting a goal of outperforming an individual or a subset of other participants. By contrast, economic experiments carefully formalize the rules and incentive structure of the competition, recognizing a wide range of types of competition, which can then be systematically tested. Understanding the principles of each discipline can greatly enhance the understanding of competition and open the door to higher-quality research in both psychology and economics. The current chapter discusses two main areas of research on competition common to economics and psychology: tournaments and common value
auctions. We discuss the differences between the structure-oriented approach of experimental economics and the mechanism-oriented approach of social psychology, as well as the shared themes between the two disciplines in these two common areas of research.
Rank-Order Tournaments and Effort-Based Competitions
Many organizational, educational, gaming, and sports settings involve tournaments— competitions that are based on comparative effort and rank-order incentives. Competition takes the form of an incentive system that links players’ rewards to their rank among competitors on a focal dimension, rather than to their absolute performance or result on that dimension. The differences in approach between psychology and economics, discussed at the beginning of this chapter, are clearly apparent in their research on tournaments.
Studies in psychology typically compare only competitive (e.g., rank-order) incentives with non-competitive ones (i.e., piece-rate or fixed pay), whereas studies in experimental economics are sensitive to the more nuanced attributes of competitive incentive structures. Economic experiments examine factors such as the dispersion of prize value awarded to different ranks (e.g., Harbring & Irlenbusch, 2011), prize distribution among multiple winners (e.g., Amaldoss et al., 2000), and the relation between effort levels observed in competition and theoretical equilibrium levels (e.g., Bull et al., 1987).
Extensive research in economics on behavior in tournaments began with Lazear and Rosen’s (1981) tournament theory. A tournament setting is one in which two or more actors invest effort or resources to win a prize, which is awarded based on relative rank (Lazear, 1989). An actor’s chance to win the prize is a function of both the actor’s willingness and ability to compete, and of the number and qualities of other competitors. This structure mirrors that of an all-pay auction (Hillman & Riley, 1989; Baye et al., 1996).
Tournament theory explains how relative rank-order prizes are better at motivating multiple actors than are individual pay-for-performance incentives. According to the theory, performance motivation is higher when the prize for success is not contingent on one’s absolute result, but is rather determined by identifying the best result among participants. The increased motivation is driven by the prospect of generating large differences in rewards by even small differences in performance, which induces individuals to keep striving to do better. This argument has received ample empirical support (e.g., Bull et al., 1987; Eisenkopf & Teyssier, 2013; Orrison et al., 2004; Schotter & Weigelt, 1992). For example, Bull et al. (1987) conducted a series of lab experiments comparing various competitive incentive structures to piece-rate incentives and measured the costs participants were willing to bear to defeat their competitors (these costs represented effort levels). They found that players who competed with others often exerted greater effort than their theoretic equilibrium levels (i.e., at which the value of their costs is equal to the expected value of their gains), and were considerably more likely to do so than players working in a piecerate system. Other research found that competitive effort may at times reach a level that is counterproductive, for example, when players choose to compete even when opting out of
