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Competition and Risk-Taking

Author

Listed:
  • Oliver Gürtler

    (University of Cologne)

  • Lennart Struth

    (University of Cologne)

  • Max Thon

    (University of Cologne)

Abstract

In many situations, agents take risks by choosing an action that increases their performance immediately, but that potentially leads to a large loss. The current paper studies how such risk-taking behavior depends on the level of competition that the agents face. We study a tournament model and we find that more intense competition, measured by the number of competitors as well as their relative standing, induces agents to take higher risks. We use a rich panel data set on professional biathlon competitions as well as survey data from professional biathletes to confirm the model predictions. Finally, we discuss managerial implications.

Suggested Citation

  • Oliver Gürtler & Lennart Struth & Max Thon, 2022. "Competition and Risk-Taking," ECONtribute Discussion Papers Series 181, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:181
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    References listed on IDEAS

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    More about this item

    Keywords

    Risk-taking; competition; tournament; incentives; biathlon;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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