A Puncher’s chance: Expected gain and risk taking in a market for superstars

Jordan Roulleau-Pasdeloup

Labour Economics, 2020, vol. 66, issue C

Abstract: Do policies that decrease potential earnings at the top of the income distribution induce agents to alter their risk-taking behavior? To answer this question I collect data on Mixed Martial Arts pomotions. I exploit the fact that one promotion introduced such a policy, while its competitor did not. Using a standard Difference-in-Differences analysis, I find that fighters in the promotion that implemented the policy take significantly less risks after its inception. On top of being statistically significant, the effect is also economically significant: the decrease in frequency of risk-taking ranges from 10% to 26% in the treatment group.

JEL-codes: D31 D81 H00 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:66:y:2020:i:c:s0927537120300944

DOI: 10.1016/j.labeco.2020.101890

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