Willingness to take risk depends on whether the risk affects others as well as oneself and on how the risk affects oneś … apparent whether the unfair safe social outcome benefits them or the other. Subjects are also more risk averse when facing … tendency to avoid social lotteries that impose a risk on the other. An attempt to reconcile those findings with standard models …

We analyze the optimal choice of risk in a two-stage tournament game between two players that have different concave … utility functions. At the first stage, both players simultaneously choose risk. At the second stage, both observe overall risk … and simultaneously decide on effort or investment. The results show that those two effects which mainly determine risk …