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The Economics of Professional Boxing Contracts

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  • Rafael Tenorio

    (DePaul University)

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    Abstract

    This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxer’s “purse†is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption-smoothing considerations alleviate this problem, savings act as further insurance, and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market and by the prevalence of “casual†boxing fans.

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    Bibliographic Info

    Article provided by in its journal Journal of Sports Economics.

    Volume (Year): 1 (2000)
    Issue (Month): 4 (November)
    Pages: 363-384

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    Handle: RePEc:sae:jospec:v:1:y:2000:i:4:p:363-384

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    Cited by:
    1. Markus Lang & Alexander Rathke & Marco Runkel, 2009. "The Economic Consequences of Foreigner Rules in National Sports Leagues," Working Papers 0908, International Association of Sports Economists;North American Association of Sports Economists.
    2. Helmut Dietl & Egon Franck & Martin Grossmann & Markus Lang, 2009. "Contest Theory and its Applications in Sports," Working Papers 0105, University of Zurich, Institute for Strategy and Business Economics (ISU).

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