Situational Experience, Expertise, and the Janus-face of Forbearance

Abstract

We study the drivers and performance outcomes of strategic forbearance – a purposeful decision not to respond to a rival’s competitive attack. Leveraging theories of skill development, we argue that forbearance can be strategically beneficial or not depending on competitors’ situational experience and level of expertise. We find that competitors with extensive experience in dealing with specific competitive situations are more likely to choose forbearance over response; however they benefit from forbearance only when they are skillful enough to create long-term positional advantage; otherwise, forbearance leads to inferior performance. Additionally, expert competitors with the highest skills favor response over forbearance, but benefit from both forbearance and response, whereas forbearance by those of limited expertise hurts performance. We operationalize forbearance as gambit decline in chess and test our propositions on a sample of 3,515 chess players making 236,767 decisions to accept or decline a gambit offer.