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The effect of competition on risk taking in contests

Spadoni,Lorenzo
; 
Potters,Jan
Abstract
We investigate, theoretically and experimentally, the effect of competition on risk taking in a contest in which players only decide on the level of risk they wish to take. Taking more risk implies a chance of a higher performance, but also implies a higher chance of failure. We vary the level of competition in two ways: by varying the number of players (2 players versus 8 players), and by varying the sensitivity of the contest to differences in performance (lottery contest versus all-pay auction). Our results show that there is a significant interaction effect between the two treatments, suggesting that players are particularly prone to take more risks if both the number of players and the sensitivity to performance are higher.
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Date
2018
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Tilburg University Research Output Collection
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Keywords
risk taking, competition, contests, experiments
Citation
Spadoni, L & Potters, J 2018, 'The effect of competition on risk taking in contests', Games, vol. 9, no. 3, 72. https://doi.org/10.3390/g9030072
URI
https://hdl.handle.net/20.500.14602/70255
License
info:eu-repo/semantics/openAccess
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