Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102127
Authors: 
Buser, Thomas
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4904
Abstract: 
How do people react to setbacks and successes? I introduce a new measure of challenge-seeking to determine the effect of winning and losing in a competition on the willingness to seek further challenges. Participants in a lab experiment compete in two-person tournaments and are then informed of their score and the outcome of the competition. Conditional on the score, winning or losing is random. Participants then have to decide on a performance target for a second round: the higher the target, the higher the potential reward, but participants who do not reach the target earn nothing. I find that, conditional on first round scores, losers go for a more challenging target but perform worse, leading to lower earnings and a higher probability of failure. These findings could have important implications for our understanding of individual career paths. Early outcomes could alter the probability of success and failure in the long term.
Subjects: 
competition
challenge seeking
career decisions
laboratory experiment
gender
JEL: 
C91
D03
J16
J01
Document Type: 
Working Paper

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