Work

Interim Rank, Risk Taking, and Performance in Dynamic Tournaments

Year: 2012

Type: article

Abstract: We empirically study the impact of interim rank on risk taking and performance using data on professionals competing in tournaments for large rewards. As we observe both the intended action and the performance of each participant, we can measure risk taking and performance separately. We present two key findings. First, risk taking exhibits an inverted-U relationship with interim rank. Revealing information on relative performance induces individuals trailing just behind the interim leaders to take greater risks. Second, competitors systematically underperform when ranked closer to the top, despite higher incentives to perform well. Disclosing information on relative ranking hinders interim leaders.

Source: Journal of Political Economy

DOI: 10.1086/668502

Authors: Christos Genakos, Mario Pagliero

Institutions: University of Cambridge, Athens University of Economics and Business, Collegio Carlo Alberto, University of Turin

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: green

Funder: Economic and Social Research Council

Award: G415511948