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Incentives and Outcomes in a Strategic Setting: The 3-Points-For-A-Win System in Soccer

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  • Moschini, GianCarlo

Abstract

We exploit a major structural change that has occurred in world soccer to study the impact of incentives on outcomes in a strategic setting. A game-theoretic model is developed that captures some essential strategic elements of soccer vis-Ã -vis the number of points awarded to a win. The observable implications of the model are tested using a large dataset that spans 30 years and 35 countries. The empirical results support the theoretical model and show that the 3-point system has led to a statistically significant increase in the expected number of goals and a decrease in the fractions of drawn matches.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12942.

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Date of creation: 24 Jun 2008
Date of revision:
Publication status: Published in Economic Inquiry, January 2010, vol. 48 no. 1, pp. 65-79
Handle: RePEc:isu:genres:12942

Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Related research

Keywords: Association football; Nash equilibrium; panel data; strategic incentives; supermodularity; tournaments;

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References

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  1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October.
  2. Dasgupta, Partha & Maskin, Eric, 1987. "The Simple Economics of Research Portfolios," Economic Journal, Royal Economic Society, vol. 97(387), pages 581-95, September.
  3. Ignacio Palacios-Huerta, 2001. "Professionals Play Minimax," Working Papers 2001-17, Brown University, Department of Economics.
  4. José Correia Guedes & Fernando S. Machado, 2002. "Changing rewards in contests: Has the three-point rule brought more offense to soccer?," Empirical Economics, Springer, vol. 27(4), pages 607-630.
  5. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  6. Shih-Hsun Hsu & Chen-Ying Huang & Cheng-Tao Tang, 2007. "Minimax Play at Wimbledon: Comment," American Economic Review, American Economic Association, vol. 97(1), pages 517-523, March.
  7. Christopher Ferrall & Anthony A. Smith, 1999. "A Sequential Game Model Of Sports Championship Series: Theory And Estimation," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 704-719, November.
  8. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 512-529, Winter.
  9. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  10. P.-A. Chiappori, 2002. "Testing Mixed-Strategy Equilibria When Players Are Heterogeneous: The Case of Penalty Kicks in Soccer," American Economic Review, American Economic Association, vol. 92(4), pages 1138-1151, September.
  11. Moschini, GianCarlo, 2004. "Nash Equilibrium in Strictly Competitive Games: Live Play in Soccer," Staff General Research Papers 12312, Iowa State University, Department of Economics.
  12. 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.
  13. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
  14. Luís M. B. Cabral, 2003. "R&D Competition when firms Choose Variance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 139-150, 03.
  15. Mark Walker & John Wooders, 2001. "Minimax Play at Wimbledon," American Economic Review, American Economic Association, vol. 91(5), pages 1521-1538, December.
  16. Roger G. Noll, 2003. "The Organization of Sports Leagues," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 530-551, Winter.
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Cited by:
  1. Lee, Yoong Hon & Parinduri, Rasyad, 2013. "Does the Three-Point Rule Make Soccer More Exciting? Evidence from a Regression Discontinuity Design," MPRA Paper 48467, University Library of Munich, Germany.

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