Personal und Organisation

Risk Aversion and tournaments: The Case of Japan and the US

In our paper, we focus on the two quite different types of tournaments established in the US and in Japan and offer an explanation why these tournaments may have evolved so differently in the two countries. Relying on a model by Kräkel (2003), we concentrate on differences in the degree of risk aversion between Japanese and US workers that may have caused the different tournament types. In the course of our argumentation, we present empirical evidence on economic as well as on cultural factors that hint at a larger degree of risk aversion on the part of Japanese employees and hence may have caused the evolution of the different tournament types.