Risk Taking Behavior in Tournaments: Evidence from the NBA

30 Pages Posted: 15 Mar 2010

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Jan Höcker

University of Würzburg

Stefan Zimmermann

affiliation not provided to SSRN

Abstract

We empirically explore the relevance of risk taking behavior in tournaments. We make use of data from the NBA season 2007/2008 and measure risk taking by the fraction of three-point shots. Current heterogeneity of teams is taken into account by intermediate results. It turns out that indeed teams who are behind increase the risk in terms of more three-point attempts. We additionally analyze the consequences of this change in behavior. Enhanced risk taking is inefficient for the vast majority of cases and only beneficial in terms of a higher winning probability if a team is behind with a rather large amount of points. We discuss possible explanations for these decision errors.

Keywords: basketball, NBA, risk taking, tournaments

JEL Classification: M5

Suggested Citation

Grund, Christian and Höcker, Jan and Zimmermann, Stefan, Risk Taking Behavior in Tournaments: Evidence from the NBA. IZA Discussion Paper No. 4812. Available at SSRN: https://ssrn.com/abstract=1570430

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jan Höcker

University of Würzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

Stefan Zimmermann

affiliation not provided to SSRN

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