Informational Effects in a Competitive Environment: Large-Scale Evidence from Table Tennis
38 Pages Posted: 9 Aug 2021
Date Written: July 22, 2021
Competitions often serve to identify the most capable individual or increase overall effort in corporations and sports. Whether to provide individuals with (ranking) information in such a context is an intriguing question. We investigate individuals' competitive behavior under different degrees of ex-ante information regarding their competitors’ ability. A natural experiment in table tennis, particularly, the introduction of table tennis rankings in 2010, allows us to study the effect of (standardized) information on individual behavior, based on more than 1.5 million matches for over 34,000 individuals. Our results suggest that favorites benefit most from additional information as their winning probability increases, whereas underdogs are discouraged by such (standardized) information. These findings are stronger for more heterogeneous matches and hold even if players possess private information. Consistently, competition intensity declines after the release of information regarding competitors' ability. Our results imply that corporations should strategically provide information based on their specific aim.
Keywords: Information, Ranking, Elo-Rating, Competition
JEL Classification: D81, D82, D83
Suggested Citation: Suggested Citation