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

  • Jose Apesteguia
  • Ignacio Palacios-Huerta

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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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 5 (December)
Pages: 2548-64

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:5:p:2548-64
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