IDEAS home Printed from
   My bibliography  Save this paper

Adapting Strategic Risk in Corporate Tournaments


  • James Bono


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

    Download full text from publisher

    File URL:
    File Function: First version, 2008
    Download Restriction: no

    More about this item


    Evolutionary Game Theory; High Variance Strategies; Tournaments.;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Meal). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.