Competition and Risk-Taking

Oliver Gürtler, Lennart Struth () and Max Thon ()
Additional contact information
Lennart Struth: University of Cologne
Max Thon: University of Cologne

No 181, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: In many situations, agents take risks by choosing an action that increases their performance immediately, but that potentially leads to a large loss. The current paper studies how such risk-taking behavior depends on the level of competition that the agents face. We study a tournament model and we find that more intense competition, measured by the number of competitors as well as their relative standing, induces agents to take higher risks. We use a rich panel data set on professional biathlon competitions as well as survey data from professional biathletes to confirm the model predictions. Finally, we discuss managerial implications.

Keywords: Risk-taking; competition; tournament; incentives; biathlon (search for similar items in EconPapers)
JEL-codes: M51 M52 Z22 (search for similar items in EconPapers)
Pages: 86 pages
Date: 2022-08
New Economics Papers: this item is included in nep-cbe, nep-hrm, nep-rmg and nep-spo
References: View references in EconPapers View complete reference list from CitEc
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_181_2022.pdf First version, 2022 (application/pdf)

Related works:
Journal Article: Competition and risk-taking (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:181

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