Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34965 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3400
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
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.
Subjects: 
Tournaments
competition
risk-taking
experiment
JEL: 
M51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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