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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|Date of creation:||1999|
|Date of revision:|
|Contact details of provider:|| Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.|
Web page: http://econ.tau.ac.il/foerder/about
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- Dekel, Eddie & Scotchmer, Suzanne, 1999.
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"Risk Taking by Mutual Funds as a Response to Incentives,"
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[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).
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"Rank-Order Tournaments as Optimum Labor Contracts,"
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0401, National Bureau of Economic Research, Inc.
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- Schlicht, Ekkehart, 1988. "Promotions, Elections, and Other Contests: Comment on Sherwin Rosen," Munich Reprints in Economics 3170, University of Munich, Department of Economics.
- Hvide, H.K., 1999.
"Tournament Rewards and Risk Taking,"
32-99, Tel Aviv.
- Hans K. Hvide, 2000. "Tournament Rewards and Risk Taking," Econometric Society World Congress 2000 Contributed Papers 0163, Econometric Society.
- Rosen, Sherwin, 1986.
"Prizes and Incentives in Elimination Tournaments,"
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