Abstract

We consider a class of dynamic tournaments in which two contestants are faced with a choice between two courses of action. The first is a riskless option (“hold”) of maintaining the resources the contestant already has accumulated in her turn and ceding the initiative to her rival. The second is the bolder option (“roll”) of taking the initiative of accumulating additional resources, and thereby moving ahead of her rival, while at the same time sustaining a risk of temporary setback. We study this tournament in the context of a jeopardy race game (JRG), extend the JRG to $N > 2$ contestants, and construct its equilibrium solution. Compared to the equilibrium solution, the results of three experiments reveal a dysfunctional bias in favor of the riskless option. This bias is substantially mitigated when the contestants are required to commit in advance how long to pursue the risky course of action