“Success breeds success” or “Pride goes before a fall”?

• Published in: Games and economic behavior Vol. 94; pp. 57 - 79
• Main Authors: Fu, Qiang, Ke, Changxia, Tan, Fangfang
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.11.2015
• Subjects: Experiment; Feedback; Multi-contest tournaments; Real effort; Team incentive; D74; Multi-contest tournaments; Feedback; Experiment; Team incentive; Real effort; C91; D72
• ISSN: 0899-8256; 1090-2473
• DOI: 10.1016/j.geb.2015.09.002

We study the impact of progress feedback on players' performance in multi-contest team tournaments, in which team members' efforts are not directly substitutable. In particular, we employ a real-effort laboratory experiment to understand, in a best-of-three tournament, how players' strategic mindsets change when they compete on a team compared to when they compete individually. Our data corroborate the theoretical predictions for teams: Neither a lead nor a lag in the first component contest affects a team's performance in the subsequent contests. In individual tournaments, however, contrary to the theoretical prediction, we observe that leaders perform worse—but laggards perform better—after learning the outcome of the first contest. Our findings offer the first empirical evidence from a controlled laboratory of the impact of progress feedback between team and individual tournaments, and contribute new insights on team incentives. •We study how strategic momentum affects performance in team and individual contests.•Experimental subjects compete in a best-of-three number-counting contest.•First-round contest outcome does not affect team performance in the second round.•Individual leaders slack-off while laggards increase effort in the second round.