Contests as selection mechanisms: The impact of risk aversion

Arbeitspapier

We investigate how individual risk preferences affect the likelihood of selecting the more able contestant within a two-player Tullock contest. Our theoretical model yields two main predictions: First, an increase in the risk aversion of a player worsens her odds unless she already has a sufficiently large advantage. Second, if the prize money is sufficiently large, a less able but less risk averse contestant can achieve an equal or even higher probability of winning than a more able but more risk averse opponent. In a laboratory experiment we confirm both, the non-monotonic impact and the compensating effect of risk aversion on winning probabilities. Our results suggest a novel explanation for the gender gap and the optimality of limited monetary incentives in selection contests.

Angaben zum Objekt

• ISBN: 978-3-943153-47-7
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: BERG Working Paper Series ; No. 127

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Noncooperative Games ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Wage Level and Structure; Wage Differentials ; Litigation Process ; Personnel Economics: Firm Employment Decisions; Promotions ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Thema: Selection Contest ; Risk Aversion ; Competitive Balance ; Gender Gap

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): March, Christoph ; Sahm, Marco
• Ereignis: Veröffentlichung
• (wer): Bamberg University, Bamberg Economic Research Group (BERG)
• (wo): Bamberg
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/167673
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ