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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...
Persistent link: https://www.econbiz.de/10012826390
undesirable gambling activities if times are moderately bad. Possible applications of the model include contests for status, job …
Persistent link: https://www.econbiz.de/10014204101
In this paper it is shown that the combination of mental accounting and loss aversion can fundamentally changes people's way of evaluating risky alternatives. The observation is applied in a market setting: Parimutuel betting markets. In parimutuel betting markets it has been found that for...
Persistent link: https://www.econbiz.de/10009734683
Persistent link: https://www.econbiz.de/10008655972
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...
Persistent link: https://www.econbiz.de/10009571037
gleichen Gründe, die Risikoaversion ausschließen, erweisen sich als Grundlage für den Wunsch nach einer Versicherung. Damit … wird der Standardansatz in Frage gestellt, nach dem Versicherungsnachfrage auf Risikoaversion beruht, mit wichtigen …
Persistent link: https://www.econbiz.de/10011998942
We test for skewness preferences in a large set of observational panel data on online poker games (n=4,450,585). Each observation refers to a choice between a safe option and a binary risk of winning or losing the game. Our setting offers a real-world choice situation with substantial incentives...
Persistent link: https://www.econbiz.de/10014486803
Measuring risk aversion is sensitive to assumptions about the wealth in subjects' utility functions. Data from the same subjects in low- and high-stake lottery decisions allow estimating the wealth in a pre-specified one-parameter utility function simultaneously with risk aversion. This paper...
Persistent link: https://www.econbiz.de/10010374868
The preference reversal phenomenon is one of the most important, long-standing, and widespread anomalies contradicting economic models of decisions under risk. It describes the robust observation of frequent "standard reversals" where long-shot gambles are valued above moderate ones but then the...
Persistent link: https://www.econbiz.de/10012390055
Previous research suggests that human reaction to risky opportunities reflects two contradicting biases: "loss aversion", and "limited level of reasoning" that leads to overconfidence. Rejection of attractive gambles is explained by loss aversion, while counterproductive risk seeking is...
Persistent link: https://www.econbiz.de/10013076466