"HOW DO INDIVIDUALS factor in the impact
of their decisions upon others, if at all?"
ask Jeffrey P. Thomas of the London
School of Economics and Political
Science in the U.K. and Pablo Schiaffino
of the department of history and social
studies at Universidad Torcuato Di Tell a
in Buenos Aires, Argentina. In a working
paper, the pair examines the reasons why
individuals accept worse outcomes for
themselves in order to compete—and
ideally win—against their rivals.
If people were rational actors, they
would seek only to "maximize their
absolute outcomes," the co-authors
explain. But when people are up against
rivals, a trait called social value orientation comes into play. They accept worse
outcomes for themselves to prevent
competitors from receiving better ones.
"Rivals will be apt to turn any interaction
into an opportunity for comparison
and competition," the researchers
write. "By contrast, nonrivals will be
more likely to operate in line with the
rational actor model."
In the first of three studies, the researchers
focused on the country-level
rivalry between Argentina and Brazil
during the 2014 Federation Internationale
de Football Association World Cup.
Argentinian participants were told that
they each would be matched with another
participant. In the rivalry condition, they were told they were matched with
Brazilians, whose team is a historical rival
to Argentina in the World Cup; in the
nonrivalry condition, participants were
told they were matched with Croatians.
Next, they were asked to complete a
simple task and choose how much both
they and their partners would earn for
each correct answer. Participants in
both groups could choose Option A, 0.8
pesos for their partners and 1.0 pesos for
themselves, or Option B, 1.6 pesos for
their partners and 1.2 pesos for themselves.
In this study, the Argentinian
participants who believed they were
competing against Brazilians were more
likely to choose lower-paying Option A
than those in the nonrivalry condition.
In another study, Thomas and Schiaffino
looked at individual-level rivalries.
They asked participants to imagine
competing against either a rival or
nonrival at work under one of two conditions—either Option A, which offered a
75 percent chance of winning a US$100
bonus, or Option B, which offered a 25
percent chance of winning a $600 bonus.
Those who imagined competing against
a rival were more likely to choose the
potentially lower payout of Option A.
"Rivalry can lead to suboptimal
decisions, with people acting in ways
counter to their financial self-interest
in order to outearn, or have the opportunity
to outperform, their rivals," the
co-authors write. "This may help explain
a range of hyper-competitive behaviors
seen in business—price wars, sabotage,
overbidding in acquisition battles—that
from the outside appear irrational."
The authors call for further study into,
among other topics, whether competing
with rivals offers psychological rewards
to individuals that outweigh any personal
losses incurred as a result.
Read "To Win or to Profit: How Rivalry Affects Payoff Decisions in Interdependent Situations."