Risk taking in selection contests
We study selection contests in which the strategic variable is degree of risk rather than amount of effort. The selection efficiency of such contests is examined. We show that the selection efficiency of a contest may be improved by limiting the competition in two ways; a) by having a small number of contestants, and b) by restricting contestant quality. The results may contribute to the understanding of phenomena like promotion processes in large firms, selection of fund managers and research tournaments.
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- Wärneryd, Karl, 2001.
"Rent, risk, and replication: preference adaptation in winner-take-all markets
[Rente, Risiko und Replikation – Präferenz- Anpassung in „Der-Sieger-bekommt-alles“ Märkten]," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-10, Social Science Research Center Berlin (WZB).
- Warneryd, Karl, 2002. "Rent, risk, and replication: Preference adaptation in winner-take-all markets," Games and Economic Behavior, Elsevier, vol. 41(2), pages 344-364, November.
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