Social ties and preferences for competition

Abstract We conduct an economic experiment to examine the causal impact of social ties on the preference for competition. Participants decide whether to engage in a competition or not. Across four treatments, potential competitors vary based on their relationship with the decision-maker: whether they had a conversation with the decision-maker prior to the competition, whether they are expected to chat after the competition, or both, or neither. We find that the process of chatting increases social closeness. This increase in social closeness tends to reduce the preference for competition when participants are expected to meet again after the competition. However, it does not change the likelihood of opting for competition if there is no prospect of further interaction. Through this experiment, we thus uncover previously unknown implications of managerial practices, such as team-building exercises and remote work options, that influence the formation of social ties.