Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars

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' first-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.