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Documenting the functional form of dynamic risk‐taking behaviour in a real options context using sporting contests

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  • Stephen Easton
  • Sean Pinder
  • Steven Stern

Abstract

Changes in risk‐taking behaviour based on interim performance are examined in high‐stakes competition. A real options framework is used to provide a richer characterisation of risk‐taking behaviour than examined in extant studies. This framework is applied to an examination of ball‐by‐ball data from 1207 cricket matches. Consistent with modelled expectations, risk taking is found to increase (decrease) at a decreasing rate following below par (above par) interim performance. This result is especially strong in situations where the resources remaining are low, a result predicted by the real options model.

Suggested Citation

  • Stephen Easton & Sean Pinder & Steven Stern, 2018. "Documenting the functional form of dynamic risk‐taking behaviour in a real options context using sporting contests," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 159-178, November.
    • Handle: RePEc:bla:acctfi:v:58:y:2018:i:s1:p:159-178
    DOI: 10.1111/acfi.12298
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    References listed on IDEAS

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