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Risk taking in competition: Evidence from match play golf tournaments

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  • Ozbeklik, Serkan
  • Smith, Janet Kiholm

Abstract

We test hypotheses regarding risk taking behavior of competitors in settings characterized by one-on-one, single elimination tournaments. We draw data from 579 professional golf matches and over 18,000 holes from 2003 to 2013 in tournaments where match-play scoring is used rather than stroke-play. Because of the uniqueness of the data, we are able to provide clean empirical tests of how risk taking is affected by horizon effects (holes remaining), peer effects arising from heterogeneity in player abilities, match status (whether behind or ahead), and the difficulty of the task/project (hole). The findings are applicable to corporate settings where only a few rivals compete for a prize, such as a winning bid, a promotion, market share dominance, and patents. Other applications include litigation contests and political elections.

Suggested Citation

  • Ozbeklik, Serkan & Smith, Janet Kiholm, 2017. "Risk taking in competition: Evidence from match play golf tournaments," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 506-523.
    • Handle: RePEc:eee:corfin:v:44:y:2017:i:c:p:506-523
    DOI: 10.1016/j.jcorpfin.2014.05.003
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    Cited by:

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    3. Adams, Nathan R. & Waddell, Glen R., 2017. "Performance and Risk Taking under Threat of Elimination," IZA Discussion Papers 10977, Institute of Labor Economics (IZA).
    4. Haijiao Cui & Bin Cao & Aimei Li & Zhaohui Li, 2023. "A General Model of Subjective Value and Stimulus-Intensity-Sensitive Hedonic Editing Strategy," Journal of Happiness Studies, Springer, vol. 24(3), pages 1191-1217, March.
    5. 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.
    6. Brian Goff & Stephen L. Locke, 2019. "Revisiting Romer: Digging Deeper Into Influences on NFL Managerial Decisions," Journal of Sports Economics, , vol. 20(5), pages 671-689, June.
    7. Daniel F. Stone & Jeremy Arkes, 2016. "Reference Points, Prospect Theory, and Momentum on the PGA Tour," Journal of Sports Economics, , vol. 17(5), pages 453-482, June.
    8. Soane, Emma & Aufegger, Lisa, 2024. "Changing risk-taking: the effects of tasks and incentives on the variability of risk-taking," LSE Research Online Documents on Economics 124339, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Tournament incentives; Risk taking; Peer effects;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L8 - Industrial Organization - - Industry Studies: Services
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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