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

Chengyuan Hua and Brad Humphreys

No 25-01, Working Papers from Department of Economics, West Virginia University

Abstract: This paper analyzes firm hiring decisions under uncertainty about worker productivity. 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 draft rounds, but risk neutral in later rounds, supporting model predictions by a prior study. Triple-differences results show inaccurate relative-age-based statistical discrimination in the draft, providing implications for team drafting strategies. We find suggestive evidence that experience drives this discrimination, and positive correlation between accuracy of statistical discrimination and team success.

Keywords: Hiring Decisions; Risk Preferences; Statistical Discrimination; National Hockey League; Entry Drafts; Relative Age (search for similar items in EconPapers)
JEL-codes: J23 J24 J71 M51 Z22 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2025-06
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