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Performance and Risk Taking under Threat of Elimination

Author

Listed:
  • Adams, Nathan R.

    () (University of Oregon)

  • Waddell, Glen R.

    () (University of Oregon)

Abstract

We revisit the incentive effects of elimination tournaments with a fresh approach to identification, the results of which strongly support that performance improves under the threat of elimination and does so, but only in part, due to increases in risk taking. Where we can separately identify changes in risk-independent performance and risk taking, our estimates suggest that 23 percent of the improvement in performance induced by potential elimination is due to productive increases in risk taking. These effects are concentrated among those closest to the margin of elimination and among lower-ability competitors.

Suggested Citation

  • Adams, Nathan R. & Waddell, Glen R., 2017. "Performance and Risk Taking under Threat of Elimination," IZA Discussion Papers 10977, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10977
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    References listed on IDEAS

    as
    1. 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.
    2. repec:eee:corfin:v:44:y:2017:i:c:p:506-523 is not listed on IDEAS
    3. Jose M. Garcia & E. Frank Stephenson, 2015. "Does Stableford Scoring Incentivize More Aggressive Golf?," Journal of Sports Economics, , vol. 16(6), pages 647-663, August.
    4. Orszag, Jonathan M., 1994. "A new look at incentive effects and golf tournaments," Economics Letters, Elsevier, vol. 46(1), pages 77-88, September.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    tournament; contract; risk; sports;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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