Incidence and Consequences of Risk‐Taking Behavior in Tournaments - Evidence from the NBA

13 Pages Posted: 27 Feb 2013

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 Zimmerman

University of Würzburg

Date Written: April 2013

Abstract

We empirically explore the relevance and efficiency of risk‐taking behavior in tournaments. We use data from the National Basketball Association (NBA) and measure risk‐taking by the fraction of three‐point shots in basketball games. We examine how point differences between teams during games affect their subsequent risk‐taking behavior. It is found that teams that are trailing are more likely to increase their use of three‐point shots. We additionally analyze the consequences of this change in behavior. Enhanced risk‐taking is inefficient in the vast majority of cases and is only beneficial if a team is trailing by a rather large margin. We discuss possible explanations for these decision errors.

JEL Classification: M5, D81, J30

Suggested Citation

Grund, Christian and Höcker, Jan and Zimmerman, Stefan, Incidence and Consequences of Risk‐Taking Behavior in Tournaments - Evidence from the NBA (April 2013). Economic Inquiry, Vol. 51, Issue 2, pp. 1489-1501, 2013. Available at SSRN: https://ssrn.com/abstract=2225700 or http://dx.doi.org/10.1111/j.1465-7295.2012.00499.x

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 Zimmerman

University of Würzburg ( email )

Sanderring 2
Würzburg, D-97070
Germany

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