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

Author

Listed:
  • Chengyuan Hua

    (West Virginia University)

  • Brad R. Humphreys

    (West Virginia University)

Abstract

This paper analyzes firm hiring decisions under uncertainty about worker productivity utilizing quasi-experimental variation generated by age requirements with specified cutoff dates. 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 rounds, but risk neutral in later rounds, supporting predictions made by models in the literature. Additional evidence from a triple differences model shows relative-age-based statistical discrimination in the draft, providing implications for firm hiring strategies. We also find suggestive evidence that this discrimination is partly driven by experience, and more accurate statistical discrimination is associated with greater team success.

Suggested Citation

  • Chengyuan Hua & Brad R. Humphreys, "undated". "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
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1252&context=econ_working-papers
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    More about this item

    Keywords

    Hiring Decisions; Risk Preferences; Statistical Discrimination; National Hockey League; Entry Drafts; Relative Age;
    All these keywords.

    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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