Risk-taking tournaments – Theory and experimental evidence

We study risk-taking behavior in a simple two person tournament in a theoretical model as well as a laboratory experiment. First, a model is analyzed in which two agents simultaneously decide between a risky and a safe strategy and we allow for all possible degrees of correlation between the outcome...

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Bibliographic Details
Published inJournal of economic psychology Vol. 31; no. 3; pp. 254 - 268
Main Authors Nieken, Petra, Sliwka, Dirk
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.06.2010
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Economic Psychology
Subjects
Competition
Correlation analysis
Economic behaviour
Economic models
Economic psychology
Evidence
Experiment
Experiments
Game theory
Microeconomics
Risk
Risk management
Risk theory
Risk-taking
Studies
Tournaments
Tournaments & championships
Tournaments Competition Risk-taking Experiment
Competition
D23
3660
Experiment
M51
Tournaments
C91
2340
Risk-taking
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Summary:We study risk-taking behavior in a simple two person tournament in a theoretical model as well as a laboratory experiment. First, a model is analyzed in which two agents simultaneously decide between a risky and a safe strategy and we allow for all possible degrees of correlation between the outcomes of the risky strategies. We show that risk-taking behavior crucially depends on this correlation as well as on the size of a potential lead of one of the contestants. We find that the experimental subjects acted mostly quite well in line with the derived theoretical predictions.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0167-4870
1872-7719
DOI:10.1016/j.joep.2009.03.009