Falling from digital grace: participation in online software contests following loss of status

Abstract

We consider an online platform for software coding contests, with a focus on the effects of status loss on decisions to participate in subsequent contests. We advance the literature on the status and online contests in several ways. First, we consider the effects of status loss on resource expenditure, which we characterize in terms of the decision to enter in a contest as well as the number of submissions. Second, because of the unique, voluntary nature of online contests, we demonstrate the effect of status loss when an individual has an option to permanently exit or withdraw from a social setting. This aspect of our study enables a departure from situations common to most of the prior work, wherein work demands persist regardless of status loss. Recognizing that status changes are quite likely to be endogenous with respect to one's past resource expenditure, we study exogenous variation in status, exploiting a natural experiment wherein status assignments were arbitrarily and unexpectedly adjusted overnight by an online contest platform operator. We also explore heterogeneity in the status loss by different determinants of status valuation.