The Role of Rankings, Big Shots, and Random Successes
University of St. Gallen - SEPS: Economics and Political Sciences; University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research
University of St. Gallen - Department of Economics
June 30, 2013
U. of St. Gallen Law & Economics Working Paper No. 2013-13
Does the relative position in a hierarchy or a ranking affect individual risk attitudes and performance? This paper proposes a new empirical approach to evaluate the implications of rankings by analyzing a rich set of data on World Cup alpine skiing tournaments for the period of 1995-2013. Focusing on close races, we identify random successes and apply a regression discontinuity design. Our results suggest substantial performance differences as a result of randomly assigned relative positions. These effects are more pronounced for racers with no prior victories. We find no evidence supporting the adoption of risky strategies after one-time successes. In sharp contrast to the growing literature on the positive effects of introducing rankings among workers or students, we document novel empirical evidence for the potential drawbacks of rankings.
Number of Pages in PDF File: 41
Keywords: performance, rankings, risk behavior, skiing, tournaments
JEL Classification: D03, D83, J24, L83, M50working papers series
Date posted: October 16, 2012 ; Last revised: July 2, 2013
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