The Value of Competition

The paper introduces a novel experimental procedure to elicit individual preferences for competition. In contrast to the competitiveness measure by Niederle and Vesterlund (2007), the design disentangles preferences for competition from financial, risk preference and expectation effects. In the baseline experiment, the existence of gender differences in preferences for competition is confirmed, however in contrast to existing studies it is unconfoundedly identified. Further more, the monetary valuation of competition decreases in subject's loss but not in risk aversion and increases in the task ability. In an application the presented within-subject design is used to analyse how individual valuations of competition change in relation of the degree of social connectedness to the opponent. It can be shown that subjects' valuations are amplified when competing against a personal friend