Reference Points, Risk-Taking Behavior, and Competitive Outcomes in Sequential Settings

Abstract: Understanding how competitive pressure affects risk-taking is crucial in sequential decision-making under uncertainty. This study examines these effects using bench press competition data, where individuals make risk-based choices under pressure. We estimate the impact of pressure on weight selection and success probability. Pressure from rivals increases attempted weights on average, but responses vary by gender, experience, and rivalry history. Counterfactual simulations show that removing pressure leads many lifters to select lower weights and achieve lower success rates, though some benefit. The results reveal substantial heterogeneity in how competition shapes both risk-taking and performance.