Competing Against Superstars

You're good at what you do, but not the best. In fact, you sometimes find yourself in direct competition with someone who happens to be leagues better than you are -- does this effect your performance?

Jennifer Brown of UC Berkeley argues that not only does your outcome change, but that it's lower than it would be without the presence of the superstar.

To reach her conclusion, Brown looked at scores for all golfers in PGA tournaments from 1999 to 2006. What's nice about this time frame is that it captures both the dominance, and temporary decline, of golf great Tiger Woods.

The chart below shows the strokes under par for top players in tournaments with and without Tiger Woods. (The higher the bar the better they did.)

While there is evidence from the chart that players performed worse around Tiger, it could also be the case that Woods chose not to participate in tournaments played on easier courses (which tend to have smaller purses).

After controlling for this and other types of factors, Brown found that top players, on average, scored 0.8 strokes higher in tournaments with Woods. This might seem like a small amount, but the average difference between 1st and 2nd place in PGA tournaments is only two strokes.

Interestingly, scores for all other (weaker) players were not affected by the presence of Tiger, suggesting no psychological impact if you were a long shot. Brown also did not find any evidence that elite players tried out riskier strategies in the hopes of overcoming Tiger's dominance. Finally, when Tiger was in a slump (the difference between his and other players' scores was small) the "Superstar Effect" disappeared.

So, what would've happened if Tiger's competitors played as well against him as they had in other tournaments? Brown estimates that Tiger's prize money earnings would've dropped to $43.2 million from $48.1 million between 1999 and 2006.

She argues that her findings apply to the realm of businesses who use internal competition to spur performance. She writes:

The implications of the superstar effect extend beyond the PGA Tour and, in principle, require firms to be cautious in using "best athlete" hiring policies in organizations where internal competition is a key driver of incentives. For example, sale managers should be aware of the consequences of introducing a superstar team member, and law firms should consider the impact of a superstar associate on the cohort's overall performance.

For more golf-inspired economics, check this out: Peer Pressure: Pro Golf vs. Bagging Groceries