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Competing on the Holodeck - The effect of virtual peers and heterogeneity in dynamic tournaments

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  • Graff, Frederik
  • Grund, Christian
  • Harbring, Christine

Abstract

We propose experiments in virtual reality (VR) as a new approach to examining economic behavior: in the present case, the topic of heterogeneity in dynamic tournaments. We simulate a realistic working situation in an immersive VR environment. Implementing a tournament in VR, we are able to mitigate the reflection problem, which usually undermines research on dynamic interaction. Moreover, VR allows us to control for the performance of the virtual peer – a humanoid avatar – and thus to get an understanding of the reaction of the subject to the avatar in a dynamic setting, as the subject is constantly able to observe the avatar's performance. We observe that the subjects’ performance is highest in a homogeneous tournament, i.e., when they compete against an avatar performing exactly as well as they themselves did in the preceding phase. This result is driven by peer effects rather than by tournament incentives. We track the behavior of each subject in each situation, and we examine the role that intermediate information about score differences play.

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  • Graff, Frederik & Grund, Christian & Harbring, Christine, 2021. "Competing on the Holodeck - The effect of virtual peers and heterogeneity in dynamic tournaments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
  • Handle: RePEc:eee:soceco:v:90:y:2021:i:c:s2214804319306561
    DOI: 10.1016/j.socec.2020.101596
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    1. Gürerk, Özgür & Bönsch, Andrea & Kittsteiner, Thomas & Staffeldt, Andreas, 2019. "Virtual humans as co-workers: A novel methodology to study peer effects," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 78(C), pages 17-29.
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    More about this item

    Keywords

    Reflection problem; Tournament; Peer effects; Real effort; Virtual reality; Avatar; Heterogeneity;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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