'Success Breeds Success' or ''Pride Goes Before a Fall'? Teams and Individuals in Best-of-Three Contests

Abstract

We study the impact of progress feedback on players' performance in multi-battle team contests, in which team members' efforts are not directly substitutable. In particular, we employ a real-effort laboratory experiment to understand, in a best-of-three-contest setting, how players' strategic mindsets change when they compete on a team compared to when they compete individually. Our data corroborate the theoretical predictions for teams: Neither a lead nor a lag in the first component contest affects a team's performance in the subsequent contests. In individual tournaments, however, contrary to the theoretical prediction, we observe that leaders perform worse - but laggards perform better - after learning the outcome of the first battle. Our findings offer the first empirical evidence from a controlled laboratory on the impact of progress feedback between team and individual contests, and contribute new insight on team incentives.