I wrote last time about competitive happiness. I came to the conclusion that it was a Bad Thing and counterproductive. However I don't think all competition is bad. I am pretty naturally competitive. I love competitive sports and have been known to instigate a late-night race for no good reason except a bit too much red wine. I care about winning too, but the fun of the competition is my main motivation. So I don't think competition is always bad.
I tutor a couple of boys in maths, and when they are messing around, I challenge them to race to complete the problems. Suddenly their heads go down and pens start scribbling. Manipulative? Possibly. Effective? Definitely.
This shows the positive and the negative sides of competition. On the one hand, it can make a relatively boring task fun. But on the other, it can motivate you do something you wouldn't otherwise choose to do. If that's good for you, like learning maths, great. But if that's bad for you, like taking a job or marrying someone you don't like because it's what everyone else wants, it's bad. Employers use competition to motivate people to stay late and work hard so they can climb up a shrinking pyramid. Potential mates encourage suitors they don't really like to hang around so that the one they want feels like they are winning a competition to get them.
Another problem with being motivated by competition is that you can feel demotivated if you are loosing. This can be a fall-out of introducing competition at work to get results, e.g. through performance-related pay. There is a lot of literature on this in management theory - you can actually demotivate staff by introducing perfomance-related pay. In addition, by introducing an extrinsic reward for a job (such as performance-related pay) you can undermine the intrinsic reward of doing the job (e.g. doing a good job for the sake of it).
I think another problem with competition is that it can lead to burnout. If you are motivated by competition, you are likely to work more hours than would be optimal for your wellbeing if you weren't competing. So creating competition might squeeze more out of people in the short-term but in the long term they may exhaust themselves.
Finally, it can lead to bad decisions. If your motivation comes from doing a good job for its own sake, you are less likely to cut corners and take shortcuts to win the competition. Just look at Volkswagen...
Competition is not bad. It underpins the free market and is partly why we humans are so successful. It can also be a lot of fun. But it needs to be balanced with other motivations, and this careful balance needs to be borne in mind when managers introduce incentive schemes and when maths tutors try to encourage young boys to concentrate on mock exam questions. It's also worth checking your motivation every now and then, especially if you are naturally competitive like me, to make sure your choices are based on what is fundamentally good for you, rather than on an arbitrary competition you wouldn't rationally choose to care about.