Work is ordinary and necessary for most people, but some people work excessively ("workaholism"), seemingly driven by internal forces. We theoretically and experimentally investigate the role of tournaments in causing or exacerbating workaholism. In our setting, agents perform a task over two stages. In the first stage, they can earn prizes, which are allocated either randomly or according to performance. Afterwards, they can continue working in a second stage, with payment by piece rate and no competition against others. Our model of motivated belief updating predicts that agents adjust their beliefs asymmetrically: they attribute the tournament outcome more to their productivity if they win a prize, and more to luck if they lose. This bias leads both winners and losers of the first-stage prize to overwork in the subsequent piece-rate stage. Results from a real-effort experiment confirm these predictions: effort in the piece-rate stage is roughly 20 percent higher when earlier bonus prizes had been allocated by performance, compared to when those prizes had been allocated randomly. The effect is seen in both winners and losers.
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