Anticipatory effects of competition on confidence and risk preference

We study anticipatory changes in confidence and risk preference aroused by the prospect of future competition. Participants in our treatment group are told they will later participate in a tournament, while those in the control group are told they will work for a piece rate. Beliefs over relative ability and risk attitudes are measured prior to this prospective task. We find no anticipatory effect on confidence in relative ability, but a significant effect on risk preference. Specifically, the treatment increases risk aversion in males, but not in females, such that the conventional gender difference in risk preference is neutralized. • Confidence and risk preference were compared in groups who expect to engage in competition or not. • There was no anticipatory effect of competition on confidence in one’s own relative ability. • Anticipation of future competition increased risk aversion, specifically in males. • An exogenous shock to confidence had only a minor effect on performance in the competition.