Managers use internal competition to motivate worker effort, yet economic theory suggests that the benefits of competition may depend critically on workers'’ relative abilities---large differences in skill may reduce competitors'’ efforts. This paper uses panel data from professional golfers and …finds that the presence of a superstar in a rank-order tournament is associated with lower competitor  performance.On average, PGA golfers' fi…rst-round scores are approximately 0.2 strokes higher when Tiger Woods participates, relative to when Woods is absent. The overall superstar effect for tournaments is approximately 0.8 strokes. The adverse superstar effect  increases when Woods is playing well and disappears during Woods’'s weaker periods. There is no evidence that reduced performance is due to “riskier” play.

We use field and natural experiments in online auctions to study the revenue effect of varying the level and disclosure of shipping charges. Our main findings are: (1) disclosure affects revenues--for low shipping charges, a seller is better off disclosing; and (2) increasing shipping charges boosts revenues when these charges are hidden. These results are not explained by changes in the number of bidders.

The equilibrium model of Ellison, Fudenberg, and Möbius (2004) predicts that, if two competing auction sites are coexisting, then seller revenues and buyer-seller ratios on each site should be approximately equal. We examine these hypotheses using field experiments selling identical items on the eBay and Yahoo auction sites. We find evidence that is inconsistent with the equilibrium hypotheses, and suggest that the eBay-Yahoo market is in the process of tipping. Robust statistical tests indicate that revenues on eBay are consistently 20 to 70 percent higher than those on Yahoo. In addition, eBay auctions attract approximately two additional buyers per seller than equivalent Yahoo auctions. We also vary the Yahoo ending rule from a hard close to soft close but find no statistically or economically significant changes in revenue or numbers of bidders. Moreover, the magnitude of the revenue and buyer-seller ratio disparities remain inconsistent with the notion of equilibrium coexistence even after accounting for various differentiators between the sites.

The 1990 Clean Air Act Amendments stipulated gasoline content requirements for metropolitan areas with air pollution levels above predetermined federal thresholds. The legislation led to exogenous changes in the type of gasoline required for sale across U.S. metropolitan areas. This paper uses a panel of detailed wholesale gasoline price data to estimate the effect of gasoline content regulation on wholesale prices and price volatility. We investigate the extent to which the estimated price effects are driven by changes in the number of suppliers versus geographic segmentation resulting from regulation. We find that prices in regulated metropolitan areas increase significantly, relative to a control group, by an average of 3 cents per gallon. The price effect, however, varies by 8 cents per gallon across regulated markets and the heterogeneity across markets is correlated with the degree of geographic isolation generated by the discontinuous regulatory requirements.

This study investigates the role of risk tolerance in shaping Canadian consumers’ willingness-to-pay for food safety risk reductions. Non-hypothetical experimental auctions were used to elicit consumer valuations of food safety improvement. To identify the relationship between food safety concern and risk-reduction valuations, individual risk-perception scores are constructed based on questionnaire responses. Results show willingness-to-pay for improved food safety tends to decrease as individuals become more risk tolerant. Differences in bids across naive and informed rounds of bidding tend to become smaller with risk tolerance for individuals who initially overestimated the food safety risk.

This paper examines the impact of corporate financial distress on labor hiring. Using novel, proprietary data from a leading online job search platform, we analyze jobseekers’ perceptions and behavior. We find that a firm’s financial decisions impact its desirability to potential employees. First, using survey responses, we find that jobseekers accurately perceive firms’ financial health. Jobseekers’ ratings of specific firms’ financial health are correlated with the companies’ credit default swap (CDS) price as well as proxies for profitability, past performance, and future prospects. Second, we find that these perceptions affect jobseekers’ application behavior. We analyze responses to job postings by major financial firms during the recent financial crisis. We find that an increase in an employer’s financial distress (as measured by an increase in its CDS spread) results in fewer applicants when they post a job opening, particularly for positions requiring advanced training.

Founded in 1971 and acquired by CEO Howard Schultz in 1987, Starbucks was an American success story. In forty years it grew from a single-location coffee roaster in Seattle, Washington to a multibillion-dollar global enterprise that operated more than 17,000 retail coffee shops in fifty countries and sold coffee beans, instant coffee, tea, and ready-to-drink beverages in tens of thousands of grocery and mass merchandise stores. However, as Starbucks moved into new market contexts as part of its aggressive growth strategy, the assets and activities central to its competitive advantage in its retail coffee shops were altered or weakened, which made it more vulnerable to competitive threats from both higher and lower quality entrants. The company also had to make decisions on vertical integration related to its expansion into consumer packaged goods.