Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58575 
Authors: 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6411
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper studies the influence of information on entry choices in a competition with a controlled laboratory experiment. We investigate whether information provision attracts mainly high productivity individuals and reduces competition failure, where competition failure occurs when a subject loses the competition because the opponent holds a higher productivity. Information on the opponent is a promising nudge to raise individuals' awareness towards the complexity of the decision problem and to update beliefs about success. In the experiment, subjects face the choice between a competition game and a safe outside option. We analyze subjects' entry behavior with a benchmark treatment without information and three treatments, where we exogenously manipulate the information on the opponents. Our results are, (1) information on the productivity distribution of all potential opponents reduces competition failures by more than 50%, (2) information on the distribution is sufficient, i.e. precise information on the matched opponent's type does not further diminish failure rates.
Subjects: 
competition
experiment
information
overconfidence
self-assessment
self-selection
tournament
JEL: 
C91
D03
D61
D81
D82
M13
M51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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