Abstract
I consider a situation in which workers have present-biased preferences and have a tendency to procrastinate their tasks, but underestimate the degree of self-control problems that they will face in the future. In such situations, their manager may want to introduce some form of competition to induce them to finish their tasks earlier. However, I show that the introduction of competition may delay the completion of their tasks. The intuition of the result is simple: the introduction of competition reinforces their belief that they will complete the task soon, which undermines their incentive to undertake the task now. This result holds even when there is only one worker who severely underestimates the degree of future self-control problems, which suggests that the mere existence of a single irrational agent can undermine the overall performance of organizations.
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