DP5532 Competition and Well-Being

Author(s): Jordi Brandts, Arno Riedl, Frans A.A.M. van Winden
Publication Date: March 2006
Keyword(s): competition, emotions, happiness, laboratory experiment, market interaction, well-being
JEL(s): A13, C92, D30, J50, M50
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5532

This paper experimentally studies the effects of competition in an environment where people's actions can not be contractually fixed. We find that, in comparison with no competition, the presence of competition does neither increase efficiency nor does it yield any gains in earnings for the short side of the exchange relation. Moreover, competition has a clearly negative impact on the disposition towards others and on the experienced well-being of those on the long side. Since subjective well-being improves only for those on the short side competition contributes to larger inequalities in experienced well-being. All in all competition does not show up as a positive force in our environment.