Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars

1. Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars Jennifer Brown Northwestern University AidenYuhao Wang

2. Abstract • On average, higher- skill PGA golfers’ first-round scores are approximately 0.2 strokes higher when Tiger Woods participates, relative to when Woods is absent. The overall superstar effect for tournaments is approximately 0.8 strokes. • There is no evidence that reduced performance is due to “risker” play. • The adverse superstar effect increases when Woods is playing well and disappears during Woods’s weaker periods.

3. Data • The objective of golf is to complete each hole with the fewest strokes of the ball. That is, low scores are better than high scores. • Professional golf tournaments typically consist of four rounds (Thursday through Sun- day). Final positions are assigned according to players’total scores for the event. A “cut” is made after the second round. • Apanel dataset of 363 PGA tournaments from 1999 to 2006 in hisanalysis.

4. Observation1

5. Observation1

6. Observation1 • The presence of a superstar in a tournament is associated with reduced performance from other competitors: • Players’scores are nearly 0.2 strokes higher in the firstround of a tournament when Woods participates, relative to their scores when Woods is not in the field. • Across all rounds of a tournament, the adverse superstar effect for highly-skilled (exempt) PGA golfers’scores is, on average, almost one stroke.

7. Observation2

8. Observation2 • Reduced performance is not attributable to “riskier”strategies: • The variance of players’ hole-by-hole scores in PGA tournaments is not statistically significantly higher when Woods is in the field, relative to when he does not participate.

9. Observation3

10. Observation3 • Superstars must be “super”to create adverse effects: • The adverse superstar effectis large in “hot”periods when Woods is particularly successful and disappears during his “cool”periods. • Within a tournament, the adverse effect is large when the superstar is in contention and not statistically significant when he is lagging in the finalround.

11. Conclusion • While there are many situations in which tournament-style internal competition improves worker performance, tournament and contest theory suggests that large inherent skill differences between competitors can have the perverse effect of reducing effort incentives under competition.