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Interim information and managerial risk taking in professional basketball

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  • Wen-Jhan Jane

    (Shih Hsin University)

Abstract

This paper examines whether the substitution decisions, under conditions of paper (or realized) losses, stimulate (or moderate) managerial risk taking. Using data on roster changes and field goal attempts (FGAs) in National Basketball Association (NBA) games, I find strong evidence of the significantly causal effects of paper and realized losses (or gains) on the decisions regarding managerial risk taking. While coaches increase their level of risk taking after experiencing the paper losses of lagging behind in the substitution strategy within a game, the effects of realized gains from leading wins, however, offer evidence of higher risk-seeking in the wake of prior wins. Furthermore, the evidence that players lagging behind increase their risk taking in the final stages of the tournament is robust in empirical settings for the shooting decisions. Finally, a coach with longer tenure engages in higher risk taking in substitutions, whereas a team with an older coach of shorter tenure engages in more risk taking in risky 3-point FGAs.

Suggested Citation

  • Wen-Jhan Jane, 2025. "Interim information and managerial risk taking in professional basketball," The Japanese Economic Review, Springer, vol. 76(1), pages 163-194, January.
    • Handle: RePEc:spr:jecrev:v:76:y:2025:i:1:d:10.1007_s42973-023-00140-7
    DOI: 10.1007/s42973-023-00140-7
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    More about this item

    Keywords

    House money; Paper losses; National Basketball Association; Risk taking; Tournaments;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z2 - Other Special Topics - - Sports Economics

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