The curse of competitiveness, Journal of Marketing, May 2008
The literature suggests that mangers are overly competitive and overemphasize competitors’ payoffs in making decisions. The authors demonstrate how two seemingly innocuous but common decision inputs that mid- and entrylevel managers use (1) advice from colleagues and (2) training could propagate this bias. The authors conduct an experiment in which one generation of participants plays a noncooperative game and then passes on advice on how to play the same game to the second generation. The authors find that the second generation is more likely to accept decisions that negatively impact the competitor’s profits, even when those decisions result in lower payoffs. The results suggest that the advice of the first generation causes the second generation to be more sensitive to relative performance. In a second experiment, the authors show that training films that create negative feelings toward competitors can have adverse effects on managers’ decisions. The training increases the willingness of managers to sacrifice own profits to reduce competitor profitability.