Strategic Behavior in Contests with Ability Heterogeneous Agents: Evidence from Field Data

Abstract

Strategic behavior can not only affect effort in contests but also undermine their selection function. We investigate two forms of strategic behavior of contestants with heterogeneous ability in large contests: Sabotage and self- promotion. We test predictions from a simple theoretical model in a large dataset of more than 38 million peer-ratings by 75,000 individuals. We find that strategic behavior influences outcomes in 25% of close contests, that self- promotion is the dominant form of strategic behavior of low-ability contestants, and that high-ability contestants are both culprits and targets of sabotage. We leverage two natural experiments to rule out alternative explanations. Our findings are most consistent with the explanation that competitors sabotage because they care about winning and anticipate being sabotaged themselves.