Behavioral Economics for Leaders

CHAPTER 26The More Competitive Your Attitude, the Higher Your Lifetime Earnings

Willingness to compete with others influences the job training people choose and their major in college. It also has an influence on whether somebody applies for a certain job. Gender differences in the willingness to compete with others therefore impact the choice of profession—and future income.

Muriel Niederle, an economist who teaches at Stanford University, and Lies Vesterlund from the University of Pittsburgh are deemed pioneers when it comes to measuring attitudes toward competition with others. In simple experimental arrangements—such as the one I outlined in the previous chapter and have used for my own studies on the effect of quota policies—they showed that women, on average, are clearly far less ready to engage competitively than men. At the onset of their research about 15 years ago, the studies were still 100% lab studies. The participants were students who, in an experiment lasting about an hour, had to make decisions on the computer on whether they wanted to be paid for each correct solution for a certain task, for example, adding up double‐digit numbers, independently of the performance of other test persons or in competition with the others. If they opted for payment in competition, only the best performer was paid; all the others got nothing.

Such experimental research inevitably raises the question of external validity, that is, whether the behavior in the context of a short ...