Why Competition may Discourage Students from Learning? A Behavioral Economic Analysis

Combining the notion of self-worth in sociology and educational psychology with economic modeling, the present paper studies incentives on students' learning in a behavioral economic model. Allowing for 'conservativeness' to modify Bayes' rule in processing newly released information and employing the concepts of 'loss aversion' and 'endowment effect' in behavioral economics, we attempt to explain analytically why competition among students may discourage them from learning. Within an educational institution, competition as an incentive scheme evaluates students on their relative performance, which strengthens the connection between students' relative performance and their perceived ability. When the perception of ability becomes a major concern, competition may motivate students to make a low effort - a strategy to win by not losing.