Saturday, March 21, 2009

Losing and winning

When Losing Leads to Winning, By Justin Wolfers, Freakonomics Here’s my favorite new fact about N.C.A.A. basketball: teams that are behind by one point at halftime are actually more likely to win than teams that are one point ahead. This striking finding comes courtesy of a terrific new paper by my Wharton colleagues, Jonah Berger and Devin Pope....

Berger and Pope are two of the brightest young behavioral economists around, and they posit a behavioral explanation. Losing can lead to winning because of the strong motivating effects of being close to your goal. You can link some of this to Prospect Theory — loss aversion suggests that you may be willing to work harder to avoid a negative outcome (a loss); the leading teams, by contrast, aren’t focused on the losing domain. And in fact, most of this “catch-up” occurs in the first 10 minutes after halftime.

But how can we tell whether this is the losing team working harder, or the halftime leader easing up?

Here, they move from field evidence to the Wharton behavioral lab, setting up a very simple experiment in which their subjects were challenged to a trivial task — how many times they could type “a” then “b” in half a minute. The subjects were told that if they beat their opponent, they would get a bigger payout.

After the first round of competition, some were given feedback, and others weren’t. And here’s the key to the experiment: they randomly told some folks that they were a long way behind their opponent, others were told they were a little bit behind, or exactly tied, a little ahead, or even a long way ahead. Those who were randomly told they were a little bit behind improved their performance dramatically, while the other groups improved by about the same amount as the control condition (that is, the same improvement as those given no feedback at all).

It’s an intriguing finding: being behind by a little yields the greatest possible effort. And while these researchers measure these effects on the basketball court, or on pounding keyboards, their implications for the rest of our lives are even more intriguing. Want your workers to work harder? Tell them that they are running a close second in the race for promotion.

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