Every eighth of March we are exposed to the disproportionate numbers of women in positions where there is money or power in society.

For example, there are only 25 women CEOs in the Fortune 500’s companies. Similarly, in Norway, only 7 percent of the companies were run by female CEOs in 2016. The academic literature provides several possible explanations for such a misrepresentation. One is that women self-select themselves into jobs that will not necessary lead to high-profile positions. Another is that there is discrimination against women. A third one is that women perform worse in competitive settings.

In this blog, I will try to challenge the third explanation by arguing that it might not be the case that the most talented female underperform compared to the most talented men in real competitive settings. I base this on the findings from several sports related studies that I have conducted.

Sports data in gender related research

One may argue that using sports data for gender related questions may have some drawbacks, which can be true, but sports data also have many advantages. First, in professional sports the contestants have very strong incentives to win. Second, using data from real sport competitions eliminates any possible skepticism about applying behavioral insights obtained in a laboratory to real-life situations. Third, sports contests involve high-stake decisions that are familiar to the participants, which is not always the case in laboratory experiments. Fourth, observing athletes doing sport provides a unique opportunity to measure performance as a function of abilities and stakes, which are very difficult to observe in “non-sports” working place. To sum up, sports data are unique in that they embody a large amount of detailed information that can be used for research purposes.

From judo to financial markets via testosterone

The first study titled “Psychological momentum and gender” (Science Direct link), and it was published in the Journal of Economic Behavior and Organization. It investigates the effect of psychological momentum on the probability of winning a bronze medal fight in professional judo. What is interesting in these fights is that one judo fighter competes after winning his/her last fight against another judo fighter who has just lost his/her last fight. We find that competing after a recent victory increases the chances of winning again, but only among men. It has no effect among women. Interestingly, this result is in line with evidence about testosterone. Testosterone is known to enhance performance of both men and women, but they react differently to victories and losses. While it is stable among females, among men it increases following victory and decreases following loss.

Moreover, several studies have shown a positive association among male traders between testosterone levels and higher profits in financial markets. There are also grounds to assume that women are less exposed to the effect of testosterone when it comes to financial risk-taking. Therefore, it is possible that similarly to judo, male traders in financial markets are exposed to the effect of psychological momentum that may create price bubbles, because success in a first investment leads to an increased willingness among men to take additional risks and reinvest. By the way, during the collapse of the housing bubble in 2008 the female traders’ representation in Wall Street was only ten percent. Thus, an increased share of women traders in the market might reduce the creation of such bubbles.

Choking under pressure in tennis

In my other co-authored study, “Choking under pressure and gender: Evidence from professional tennis” (Science Direct link) that was published in the Journal of Economic Psychology, we investigated the probability to win a game on serve at different junctures of a tennis match in the most prestigious tennis tournaments. For those who is not familiar enough with the rules of tennis, a player who serves has an advantage to win the game. Comparing the performance of men versus women in low-stake versus high-stake situations, we find that men lose significantly more games on serve in high-stake situations compared to low-stake situations. Our results show that even if women show a drop in performance in the more crucial stages of the match, the drop is still about 50% smaller than that of men.

Some concluding remarks

The results of these two studies raise the question whether the performance of high-profile women is really worse than this of men in real competitive situations with high pressure. What we find is that actually men are more exposed to different psychological effects and that women’s performance is more stable. However, isn’t it what we are looking for in leadership: stability and coping with pressure? If so, then, play like a girl and you will find those qualities.

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Professor Alex Krumer:

When I was 6 years old, a strange table with many numbers in my father’s newspaper caught my eyes. I tried to understand the meaning of all these different numbers, which seemed to me as an impossible mission, but I did not give up. It turned out to be a usual table from a sport league that described the number of points, goal difference, etc. Since then, different combinatorial structures and rules of tournaments have fascinated me.