The Effect of Peer Pressure on Performance in Crowdsourcing Contests

We investigate whether and why performance differences exist between contestants with the same abilities but who compete against more skilled or less skilled contestants. We analyze 1,677 unique coders competing in 38 software algorithm competitions with random assignment. Part of these coders compete
amongst the top-performers of a low-ability group, the others compete amongst the bottom-performers of a high-ability group. We compare the performance of the coders competing in the two groups using a Regression Discontinuity Design (RDD) and investigate to what extent the effort exerted by the coders can explain performance differentials. We find that bottom-performers of a high-ability group are characterized by a performance that is 17% lower than that of coders who have the same ability-level but compete as top-performers of a low-ability group. However, a decrease in effort cannot explain the performance differentials we observe. Instead, we find that psychological factors like choking under pressure and a rational decision to take higher risks hamper the problem-solving behavior of the contestants under pressure. Our paper contributes to the literature on performance in contests by providing new and causal evidence of the mechanisms causing performance differentials.