Risk Taking in Selection Contests

Hvide, Hans K.; Kristiansen, Eirik Gaard

doi:10.2139/ssrn.189989

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Risk Taking in Selection Contests

31 Pages Posted: 15 Nov 1999

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Eirik Gaard Kristiansen

NHH Norwegian School of Economics; NHH Norwegian School of Economics - Department of Economics

Date Written: November 27, 2000

Abstract

We study a tournament/contest where the strategic variable is degree of risk rather than amount of effort. The degree to which the most able contestants win (selection efficiency) is examined. We show that the selection efficiency of a contest may be improved by limiting the competition in two ways; a) by having a small number of contestants, and b) by restricting contestant quality. The results may contribute to our understanding of such diverse phenomena as promotion processes in large firms, selection of fund managers and research tournaments.

JEL Classification: C44, D29, D83, J41

Suggested Citation: Suggested Citation

Hvide, Hans and Kristiansen, Eirik Gaard, Risk Taking in Selection Contests (November 27, 2000). Available at SSRN: https://ssrn.com/abstract=189989 or http://dx.doi.org/10.2139/ssrn.189989