Risk-taking tournaments - Theory and experimental evidence
AbstractWe study risk-taking behavior in a simple two person tournament in a theoretical model as well as a laboratory experiment. First, a model is analyzed in which two agents simultaneously decide between a risky and a safe strategy and we allow for all possible degrees of correlation between the outcomes of the risky strategies. We show that risk-taking behavior crucially depends on this correlation as well as on the size of a potential lead of one of the contestants. We find that the experimental subjects acted mostly quite well in line with the derived theoretical predictions.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 31 (2010)
Issue (Month): 3 (June)
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Web page: http://www.elsevier.com/locate/joep
Tournaments Competition Risk-taking Experiment;
Other versions of this item:
- Nieken, Petra & Sliwka, Dirk, 2008. "Risk-Taking Tournaments: Theory and Experimental Evidence," IZA Discussion Papers 3400, Institute for the Study of Labor (IZA).
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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