IDEAS home Printed from https://ideas.repec.org/p/amu/wpaper/1708.html
   My bibliography  Save this paper

Adapting Strategic Risk in Corporate Tournaments

Author

Listed:
  • James Bono

Abstract

The way in which agents manipulate the distribution of performance outcomes in strategic settings has received increasing attention in the game theory literature. This paper uses an evolutionary approach to examine the optimal adaptation of strategic variability in corporate promotion tournaments. The model describes a situation in which agents are promoted to a higher salary based on observable performance, which depends stochastically on effort. Simulation results show that the optimal adaptation of risk-taking is highly dependent on the population mix. However, strategies that involve adapting risk early in the tournament are almost never part of an evolutionarily stable state, particularly when using uniform initial conditions. Results also show how managers can choose rank-order payoff schemes and tournament lengths to optimize with respect to risk-taking and effort.

Suggested Citation

  • James Bono, 2008. "Adapting Strategic Risk in Corporate Tournaments," Working Papers 2008-17, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:1708
    DOI: 10.17606/rrvs-3b98
    as

    Download full text from publisher

    File URL: https://doi.org/10.17606/rrvs-3b98
    File Function: First version, 2008
    Download Restriction: no

    File URL: https://libkey.io/10.17606/rrvs-3b98?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Usvitskiy, Alexander, 2022. "Strategic risk-taking in dynamic contests," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 511-534.

    More about this item

    Keywords

    Evolutionary Game Theory; High Variance Strategies; Tournaments.;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:amu:wpaper:1708. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Meal (email available below). General contact details of provider: http://www.american.edu/cas/economics/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.