IDEAS home Printed from https://ideas.repec.org/p/bsu/wpaper/199601.html
   My bibliography  Save this paper

Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’

Author

Listed:
  • James E. McClure

    (Department of Economics, Ball State University)

  • Lee C. Spector

    (Department of Economics, Ball State University)

Abstract

Tournaments have long been used as a resource allocation device. Regardless of the margin of victory, a tournament's champion is typically rewarded far more handsomely than are its losers. For this reason, a tournament can generally be expected to elicit spectacular levels of performance from a group of competitors; performances in professional golf tournaments are an example. Surprisingly, the analysis in this paper indicates the existence of no significant relationship between the rewards and performances of participants in the NCAA basketball tournament. To explain this finding we allude to the classic principal-agent problem.

Suggested Citation

  • James E. McClure & Lee C. Spector, 1996. "Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’," Working Papers 199601, Ball State University, Department of Economics, revised Jan 1997.
    • Handle: RePEc:bsu:wpaper:199601
    as

    Download full text from publisher

    File URL: http://econfac.bsu.edu/research/workingpapers/bsuecwp199601mcclure.pdf
    File Function: First version, 1996
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Green, Jerry R & Stokey, Nancy L, 1983. "A Comparison of Tournaments and Contracts," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 349-364, June.
    3. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    4. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 1-33, February.
    5. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    6. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    7. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 155-179, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ed Balsdon & Lesley Fong & Mark A. Thayer, 2007. "Corruption in College Basketball? Evidence of Tanking in Postseason Conference Tournaments," Journal of Sports Economics, , vol. 8(1), pages 19-38, February.
    2. Beck A. Taylor & Justin G. Trogdon, 2002. "Losing to Win: Tournament Incentives in the National Basketball Association," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 23-41, January.
    3. Furqan, Mehreen & Ijaz, Maha, 2014. "Publication Trends and Methodological Advancements in the Area of Agency Cost," Sukkur IBA Journal of Management and Business, Sukkur IBA University, vol. 1(1), pages 57-86, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    2. Edward P. Lazear & Kathryn L. Shaw, 2007. "Personnel Economics: The Economist's View of Human Resources," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 91-114, Fall.
    3. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2015. "The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 521-569.
    4. Sun, Sophia Li & Habib, Ahsan, 2020. "Determinants and consequences of tournament incentives: A survey of the literature in accounting and finance," Research in International Business and Finance, Elsevier, vol. 54(C).
    5. Ajay Kalra & Mengze Shi, 2001. "Designing Optimal Sales Contests: A Theoretical Perspective," Marketing Science, INFORMS, vol. 20(2), pages 170-193, December.
    6. Harbring, Christine & Irlenbusch, Bernd, 2003. "An experimental study on tournament design," Labour Economics, Elsevier, vol. 10(4), pages 443-464, August.
    7. Bingley, P. & Eriksson, T, 2001. "Pay Spread and Skewness. Employee Effort and Firm Productivity," Papers 01-2, Aarhus School of Business - Department of Economics.
    8. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    9. Tor Eriksson & Sabrina Teyssier & Marie‐Claire Villeval, 2009. "Self‐Selection And The Efficiency Of Tournaments," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 530-548, July.
    10. Bernd Irlenbusch, 2006. "Experimental perspectives on incentives in organisations," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 14(1), pages 1-24, February.
    11. Tor Eriksson & Sabrina Teyssier & Marie Claire Villeval, 2006. "Effort Self-Selection and the Efficiency of Tournaments," Post-Print halshs-00142876, HAL.
    12. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    13. Miklos-Thal, Jeanine & Ullrich, Hannes, 2010. "Effort in Nomination Contests: Evidence from Professional Soccer," MPRA Paper 24340, University Library of Munich, Germany.
    14. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 512-529, Winter.
    15. P.-J. Jost & M. Kräkel, 2005. "Preemptive behavior in sequential-move tournaments with heterogeneous agents," Economics of Governance, Springer, vol. 6(3), pages 245-252, November.
    16. James G. Lynch & Jeffrey S. Zax, 2000. "The Rewards to Running," Journal of Sports Economics, , vol. 1(4), pages 323-340, November.
    17. Tanaka, Ryuichi & Ishino, Kazutoshi, 2012. "Testing the incentive effects in tournaments with a superstar," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 393-404.
    18. Waldman, Michael, 2013. "Classic promotion tournaments versus market-based tournaments," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 198-210.
    19. Garicano, Luis & Palacios-Huerta, Ignacio, 2005. "Sabotage in Tournaments: Making the Beautiful Game a Bit Less Beautiful," CEPR Discussion Papers 5231, C.E.P.R. Discussion Papers.
    20. Jia, Hao & Skaperdas, Stergios & Vaidya, Samarth, 2013. "Contest functions: Theoretical foundations and issues in estimation," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 211-222.
    21. Matthias Kräkel, 2006. "Splitting Leagues," Journal of Economics, Springer, vol. 88(1), pages 21-48, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bsu:wpaper:199601. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tung Liu (email available below). General contact details of provider: https://edirc.repec.org/data/debsuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.