Do Professionals Get It Right? Limited Attention and Risk-Taking Behaviour
Journal
The Economic Journal
ISSN
1468-0297
Type
journal article
Date Issued
2016-05
Author(s)
Abstract
Does information processing affect individual risk-taking behaviour? This article provides evidence that professional athletes suffer from a left-digit bias when dealing with signals about differences in performance. Using data from the highly competitive field of World Cup alpine skiing for the period of 1992–2014, we show that athletes misinterpret actual differences in race times by focusing on the leftmost digit, which results in increased risk-taking behaviour. For the estimation of causal effects, we exploit the fact that tiny time differences can be attributed to random shocks. We find no evidence that high-stakes situations or individual experience reduce the left-digit bias.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Refereed
Yes
Publisher
Wiley-Blackwell
Publisher place
Oxford [u.a.]
Volume
126
Number
592
Start page
724
End page
755
Subject(s)
Eprints ID
248827
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Foellmi_et_al-2016-The_Economic_Journal.pdf
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Format
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