Resource title

Risk taking in winner-take-all competition

Resource image

image for OpenScout resource :: Risk taking in winner-take-all competition

Resource description

We analyze a two-stage game between two heterogeneous players. At stage one, risk is chosen by one of the players. At stage two, both players observe the given level of risk and simultaneously invest in a winner-take-all competition. The game is solved theoretically and then tested by using laboratory experiments. We find three effects that determine risk taking at stage one - a discouragement effect, a cost effect and a likelihood effect. For the likelihood effect, risk taking and investmentsare clearly in line with theory. Pairwise comparison shows that the cost effect seems to be more relevant than the discouragement effect when taking risk.

Resource author

Matthias Kräkel, Petra Nieken, Judith Przemeck

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27168

Resource license

Adapt according to the presented license agreement and reference the original author.