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American Economic Review: Vol. 100 No. 5 (December 2010)

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Psychological Pressure in Competitive Environments: Evidence from a Randomized Natural Experiment

Article Citation

Apesteguia, Jose, and Ignacio Palacios-Huerta. 2010. "Psychological Pressure in Competitive Environments: Evidence from a Randomized Natural Experiment." American Economic Review, 100(5): 2548-64.

DOI: 10.1257/aer.100.5.2548

Abstract

Emotions can have important effects on performance and socioeconomic outcomes. We study a natural experiment where two teams of professionals compete in a tournament taking turns in a sequence. As the sequential order is determined by the random outcome of a coin flip, the treatment and control groups are determined via explicit randomization. Hence, absent any psychological effects, both teams should have the same probability of winning. Yet, we find a systematic first-mover advantage. Further, professionals are self-aware of their own psychological effects and, when given the chance, they rationally react by systematically taking advantage of these effects. (JEL C93, D03, D82, L83)

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Authors

Apesteguia, Jose (U Pompeu Fabra)
Palacios-Huerta, Ignacio (London School of Economics)

JEL Classifications

C93: Field Experiments
D03: Behavioral Economics: Underlying Principles
D82: Asymmetric and Private Information
L83: Sports; Gambling; Recreation; Tourism


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