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The effects of prior outcomes on managerial risk taking: Evidence from Italian professional soccer

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  • Bucciol, Alessandro
  • Hu, Alessio
  • Zarri, Luca

Abstract

A growing empirical literature documents that managerial risk taking is linked to an individual’s history of relevant personal and professional experiences. Using male soccer data on 32 teams and 2,160 matches covering eight seasons of the Italian premier league (“Serie A”), we provide clear evidence that change in managerial risk taking – proxied by a team coach’s decision to alter the initial system of play in a match – significantly depends on having experienced wins or defeats in the recent past. In particular, we show that prior outcomes matter, as change in risk taking strongly and positively depends on prior defeats. Single defeats and heavy defeats make the coaches more risk seeking (opting for more offensive systems of play), while multiple defeats make the coaches less risk seeking. Changing risk taking, though, does not seem to pay off in terms of match outcomes. Finally, we interestingly document that in top teams managerial risk taking is not sensitive at all to prior outcomes, regardless of their positive or negative direction.

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  • Bucciol, Alessandro & Hu, Alessio & Zarri, Luca, 2019. "The effects of prior outcomes on managerial risk taking: Evidence from Italian professional soccer," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    • Handle: RePEc:eee:joepsy:v:75:y:2019:i:pb:s0167487017307328
    DOI: 10.1016/j.joep.2018.07.006
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    Cited by:

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    2. Pastoriza, David & Alegre, Inés & Canela, Miguel A., 2021. "Conditioning the effect of prize on tournament self-selection," Journal of Economic Psychology, Elsevier, vol. 86(C).
    3. Takakorn Likitapiwat & Sirimon Treepongkaruna & Pornsit Jiraporn, 2023. "CSR variability, managerial risk aversion, and hostile takeover threats," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 773-790, March.
    4. David Boto-Garcìa & Alessandro Bucciol & Luca Zarri, 2020. "Managerial Beliefs and Firm Performance: Field Evidence from Professional Elite Soccer," Working Papers 19/2020, University of Verona, Department of Economics.
    5. Ulf Rinne & Hendrik Sonnabend, 2022. "Female workers, male managers: Gender, leadership, and risk‐taking," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 906-930, January.

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    More about this item

    Keywords

    Managerial risk taking; Prior outcomes; Soccer; Field data;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Z20 - Other Special Topics - - Sports Economics - - - General

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