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Hiring Decisions Under Productivity Uncertainty: Risk Preferences and Inaccurate Statistical Discrimination in NHL Entry Drafts

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Listed:
  • Chengyuan Hua

    (West Virginia University)

  • Brad R. Humphreys

    (West Virginia University)

Abstract

This paper analyzes firm hiring decisions under uncertainty about worker productivity. We exploit an exogenous September 15 cutoff date in the National Hockey League entry draft to estimate a sharp RDD and find evidence of risk aversion by teams when drafting players. Specifically, teams appear risk averse in early draft rounds, but risk neutral in later rounds, supporting model predictions by a prior study. Triple-differences results show inaccurate relative-age-based statistical discrimination in the draft, providing implications for team drafting strategies. We find suggestive evidence that experience drives this discrimination, and positive correlation between accuracy of statistical discrimination and team success.

Suggested Citation

  • Chengyuan Hua & Brad R. Humphreys, 2025. "Hiring Decisions Under Productivity Uncertainty: Risk Preferences and Inaccurate Statistical Discrimination in NHL Entry Drafts," Working Papers 25-01, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:25-01
    as

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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1252&context=econ_working-papers
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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