Documenting the functional form of dynamic risk-taking behaviour in a real options context using sporting contests
AuthorPinder, S; Easton, S; Stern, S
Source TitleAccounting and Finance
University of Melbourne Author/sPinder, Sean
Document TypeJournal Article
CitationsPinder, S., Easton, S. & Stern, S. (2018). Documenting the functional form of dynamic risk-taking behaviour in a real options context using sporting contests. Accounting and Finance, 58 (S1), pp.159-178. https://doi.org/10.1111/acfi.12298.
Access StatusOpen Access
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.
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