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An empirical study on risk-taking in tournaments

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  • Christian Grund
  • Oliver Gurtler

Abstract

Individuals faced by a tournament can often not only choose their effort level, but also the risk level of their strategy. There are some theoretical contributions on risk-taking in tournaments, which mainly point out disadvantages with respect to exerted effort. Empirical evidence is rare. This letter analyses the risk-taking behaviour of professional soccer coaches. It is found that risk-taking concerning the kind of observed substitutions is, indeed, relevant. However, risk-taking does not pay off.

Suggested Citation

  • Christian Grund & Oliver Gurtler, 2005. "An empirical study on risk-taking in tournaments," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 457-461.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:8:p:457-461
    DOI: 10.1080/13504850500109881
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    References listed on IDEAS

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    1. Lee, Jungmin, 2004. "Prize and Risk-Taking Strategy in Tournaments: Evidence from Professional Poker Players," IZA Discussion Papers 1345, Institute of Labor Economics (IZA).
    2. Matthias Kräkel & Dirk Sliwka, 2004. "Risk Taking in Asymmetric Tournaments," German Economic Review, Verein für Socialpolitik, vol. 5(1), pages 103-116, February.
    3. Chevalier, Judith & Ellison, Glenn, 1997. "Risk Taking by Mutual Funds as a Response to Incentives," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1167-1200, December.
    4. Hans K. Hvide, 2002. "Tournament Rewards and Risk Taking," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 877-898, October.
    5. Kjetil Haugen & Arild Hervik, 2002. "Estimating the value of the Premier League or the worlds most profitable investment project," Applied Economics Letters, Taylor & Francis Journals, vol. 9(2), pages 117-120.
    6. Hvide, Hans K. & Kristiansen, Eirik G., 2003. "Risk taking in selection contests," Games and Economic Behavior, Elsevier, vol. 42(1), pages 172-179, January.
    7. R. H. Koning, 2003. "An econometric evaluation of the effect of firing a coach on team performance," Applied Economics, Taylor & Francis Journals, vol. 35(5), pages 555-564.
    8. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    9. Barry Reilly & Robert Witt, 1995. "English league transfer prices: is there a racial dimension?," Applied Economics Letters, Taylor & Francis Journals, vol. 2(7), pages 220-222.
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    Citations

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    Cited by:

    1. Christian Deutscher & Arne Büschemann, 2016. "Does Performance Consistency Pay Off Financially for Players? Evidence From the Bundesliga," Journal of Sports Economics, , vol. 17(1), pages 27-43, January.
    2. Bucciol, Alessandro & Hu, Alessio & Zarri, Luca, 2019. "The effects of prior outcomes on managerial risk taking: Evidence from Italian professional soccer," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    3. Mueller-Langer, Frank & Andreoli-Versbach, Patrick, 2013. "Leading-effect vs. Risk-taking in Dynamic Tournaments: Evidence from a Real-life Randomized Experiment," Discussion Papers in Economics 15452, University of Munich, Department of Economics.
    4. Gürtler, Oliver & Struth, Lennart & Thon, Max, 2023. "Competition and risk-taking," European Economic Review, Elsevier, vol. 160(C).
    5. B Frick & R Simmons, 2007. "The allocation of rewards in athletic contests," Working Papers 591160, Lancaster University Management School, Economics Department.
    6. Alessandro Bucciol & Alessio Hu & Luca Zarri, 2017. "The Effects of Prior Shocks on Managerial Risk Taking: Evidence from Italian Professional Soccer," Working Papers 17/2017, University of Verona, Department of Economics.
    7. Böheim, René & Freudenthaler, Christoph & Lackner, Mario, 2016. "Gender Differences in Risk-Taking: Evidence from Professional Basketball," IZA Discussion Papers 10011, Institute of Labor Economics (IZA).
    8. Kräkel, Matthias, 2008. "Optimal risk taking in an uneven tournament game with risk averse players," Journal of Mathematical Economics, Elsevier, vol. 44(11), pages 1219-1231, December.
    9. Nüesch Stephan & Haas Hartmut, 2012. "Empirical Evidence on the “Never Change a Winning Team” Heuristic," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(3), pages 247-257, June.
    10. Kondo, Kazumine, 2011. "Have credit rating agencies become more stringent towards Japanese regional banks?," MPRA Paper 30500, University Library of Munich, Germany.
    11. repec:lan:wpaper:3678 is not listed on IDEAS
    12. Genakos, Christos & Pagliero, Mario, 2009. "Risk taking and performance in multistage tournaments: evidence from weightlifting competitions," LSE Research Online Documents on Economics 28599, London School of Economics and Political Science, LSE Library.
    13. Ulf Rinne & Hendrik Sonnabend, 2022. "Female workers, male managers: Gender, leadership, and risk‐taking," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 906-930, January.
    14. Mueller-Langer Frank & Andreoli-Versbach Patrick, 2017. "Leading-Effect, Risk-Taking and Sabotage in Two-Stage Tournaments: Evidence from a Natural Experiment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 237(1), pages 1-28, February.
    15. repec:lan:wpaper:3570 is not listed on IDEAS
    16. Grund, Christian & Höcker, Jan & Zimmermann, Stefan, 2010. "Risk Taking Behavior in Tournaments: Evidence from the NBA," IZA Discussion Papers 4812, Institute of Labor Economics (IZA).
    17. Mixon Jr., Franklin G. & Gómez-Mejia, Luis R., 2020. "The Competitive Struggle to Win Tournaments: The Allies’ Race to Capture Adolf Hitler’s Eagle’s Nest," American Business Review, Pompea College of Business, University of New Haven, vol. 23(1), pages 3-17, May.
    18. Stephen Easton & Sean Pinder & Steven Stern, 2018. "Documenting the functional form of dynamic risk‐taking behaviour in a real options context using sporting contests," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 159-178, November.
    19. Christos Genakos & Mario Pagliero, 2012. "Interim Rank, Risk Taking, and Performance in Dynamic Tournaments," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 782-813.
    20. repec:lan:wpaper:3963 is not listed on IDEAS
    21. Christian Deutscher & Oliver Gürtler & Joachim Prinz & Daniel Weimar, 2017. "The Payoff To Consistency In Performance," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1091-1103, April.

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