This paper presents a strategic model of risk-taking behavior in contests. Formally, we analyze an n-player winner-take-all contest in which each player decides when to stop a privately observed Brownian Motion with drift. A player whose process reaches zero has to stop. The player with the...

This paper investigates whether contest schemes induce excessive risk-taking by implementing in the laboratory a novel stopping task based on the contest model of Seel and Strack (2013). In this stylized setting, managers who face contest payoffs have an incentive to delay halting projects with...