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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. Hans K. Hvide, 2002. "Tournament Rewards and Risk Taking," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 877-898, October.
    2. 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.
    3. 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.
    4. Matthias Kräkel & Dirk Sliwka, 2004. "Risk Taking in Asymmetric Tournaments," German Economic Review, Verein für Socialpolitik, vol. 5(1), pages 103-116, February.
    5. 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.
    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.
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    Citations

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    Cited by:

    1. 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.
    2. repec:lan:wpaper:3570 is not listed on IDEAS
    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. Grund, Christian & Höcker, Jan & Zimmermann, Stefan, 2010. "Risk Taking Behavior in Tournaments: Evidence from the NBA," IZA Discussion Papers 4812, Institute for the Study of Labor (IZA).
    5. B Frick & R Simmons, 2007. "The allocation of rewards in athletic contests," Working Papers 591160, Lancaster University Management School, Economics Department.
    6. René Böheim & Christoph Freudenthaler & Mario Lackner, 2016. "Gender Differences in Risk-Taking: Evidence from Professional Basketball," Economics working papers 2016-07, Department of Economics, Johannes Kepler University Linz, Austria.
    7. 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.
    8. 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.
    9. repec:lan:wpaper:3963 is not listed on IDEAS
    10. 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.
    11. Kondo, Kazumine, 2011. "Have credit rating agencies become more stringent towards Japanese regional banks?," MPRA Paper 30500, University Library of Munich, Germany.
    12. repec:lan:wpaper:3678 is not listed on IDEAS
    13. repec:bla:ecinqu:v:55:y:2017:i:2:p:1091-1103 is not listed on IDEAS

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