Falling from Digital Grace: Participation in Online Software Contests Following Loss of Status

Abstract

We focus on the effects of status loss on decisions to participate in subsequent contests in online coding platform. We advance the relevant literature in several ways. First, by considering the effects of status loss on resource expenditure, we depart from the prior status literature, which has predominantly looked at performance implications of the status loss. Second, because of the voluntary nature of online contests, we demonstrate how the effects of status loss manifest when permanent exit or abstention is possible. This aspect marks another departure from situations common to the prior work, wherein work demands persist regardless of status changes. Lastly, recognizing that status changes may be endogenous to one's past resource expenditure, we study exogenous variation in status, exploiting a natural experiment wherein status assignments were adjusted overnight by the platform operator, in a manner completely independent of individuals' prior activities, resulting in sudden loss of status