The Strong, the Weak, and Lady Luck: Types of Uncertainty and their Effects on Competitive Behavior

Parties in competitive interactions are frequently unequal to one another. Inequality often discourages competitors, decreases participation and competitive investment. We define two types of uncertainty in competitions, and assess their impact on weak and strong competitors' behavior: 1) Performance uncertainty, pertaining to the relationship between competitors' investment and their observed performance; 2) Judgment uncertainty, pertaining to the translation of observed performance to winning odds. Compared to a competition where observed performance equals investment, Performance uncertainty encourages weak and strong competitors alike, increases the overall investment, and escalates the intensity of conflict. In contrast, Judgment uncertainty leads to more equal competitions by encouraging weak competitors. We reconcile seemingly conflicting findings and assumptions in the literature regarding uncertainty in competitions by distinguishing between Performance uncertainty and Judgment uncertainty. Our findings underscore the theoretical importance of conceptualizing uncertainty in a more fine-grained way, and have practical implications for competitors and competition organizers.