Documenting the functional form of dynamic risk-taking behaviour in a real options context using sporting contests

Stephen Easton, Sean Pinder, Steven Stern

Research output: Contribution to journalArticleResearchpeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)159-178
Number of pages20
JournalAccounting and Finance
Volume58
Early online date20 Sep 2017
DOIs
Publication statusPublished - 1 Nov 2018

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Real options
Functional form
Risk-taking behavior
Contests
Cricket
Resources
Risk taking

Cite this

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Documenting the functional form of dynamic risk-taking behaviour in a real options context using sporting contests. / Easton, Stephen; Pinder, Sean; Stern, Steven.

In: Accounting and Finance, Vol. 58, 01.11.2018, p. 159-178.

Research output: Contribution to journalArticleResearchpeer-review

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