IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v30y2021i1p122-138.html
   My bibliography  Save this article

There is no ‘I’ in team: Career concerns, risk‐taking incentives, and team outcomes

Author

Listed:
  • Phong T. H. Ngo
  • Steven Roberts

Abstract

The National Basketball Association contracting rules provide plausibly exogenous variation in career concerns near contract end. We use this setting to study how individual career concerns affect risk‐taking behavior and can sabotage team performance. Using the frequency and duration of player injuries from 1991 to 2013 we measure individual risk‐taking behavior. We find that the average player's likelihood of missing a game due to injury falls by 0.06 percentage points (or over 100% relative to the mean injury rate) in the final 3 months of his contract, and when missing games due to injury is unavoidable, his recovery time drops by 22 days. However, “elite” players with virtually no career concerns actually miss more games due to injury. Finally, we find that elite players missing too many games and “average” players playing before healthy, combine to hurt team performance. For each additional player in the last 3 months on contract, the win probability for that team falls by over 2.6%.

Suggested Citation

  • Phong T. H. Ngo & Steven Roberts, 2021. "There is no ‘I’ in team: Career concerns, risk‐taking incentives, and team outcomes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(1), pages 122-138, February.
    • Handle: RePEc:bla:jemstr:v:30:y:2021:i:1:p:122-138
    DOI: 10.1111/jems.12396
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jems.12396
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jems.12396?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brett Green & Jeffrey Zwiebel, 2018. "The Hot-Hand Fallacy: Cognitive Mistakes or Equilibrium Adjustments? Evidence from Major League Baseball," Management Science, INFORMS, vol. 64(11), pages 5315-5348, November.
    2. Wooldridge, Jeffrey M., 2019. "Correlated random effects models with unbalanced panels," Journal of Econometrics, Elsevier, vol. 211(1), pages 137-150.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Enno Siemsen, 2008. "The Hidden Perils of Career Concerns in R& D Organizations," Management Science, INFORMS, vol. 54(5), pages 863-877, May.
    5. Judith Chevalier & Glenn Ellison, 1999. "Career Concerns of Mutual Fund Managers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 389-432.
    6. Ping Hu & Jayant R. Kale & Marco Pagani & Ajay Subramanian, 2011. "Fund Flows, Performance, Managerial Career Concerns, and Risk Taking," Management Science, INFORMS, vol. 57(4), pages 628-646, April.
    7. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
    8. Emmanuelle Auriol & Guido Friebel & Lambros Pechlivanos, 2002. "Career Concerns in Teams," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 289-307, Part.
    9. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    10. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
    11. Lehn, Kenneth, 1982. "Property Rights, Risk Sharing, and Player Disability in Major League Baseball," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 343-366, October.
    12. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    13. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    14. Riju Joshi & Jeffrey M. Wooldridge, 2019. "Correlated Random Effects Models with Endogenous Explanatory Variables and Unbalanced Panels," Annals of Economics and Statistics, GENES, issue 134, pages 243-268.
    15. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 183-198.
    16. Harrison Hong & Jeffrey D. Kubik & Amit Solomon, 2000. "Security Analysts' Career Concerns and Herding of Earnings Forecasts," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 121-144, Spring.
    17. Bengt Holmström, 1999. "Managerial Incentive Problems: A Dynamic Perspective," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 169-182.
    18. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    19. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 183-198.
    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. Mario Lackner & Hendrik Sonnabend, 2023. "Presenteeism when employers are under pressure: evidence from a high‐stakes environment," Economica, London School of Economics and Political Science, vol. 90(358), pages 477-507, April.

    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. Jeanine Miklós-Thal & Hannes Ullrich, 2016. "Career Prospects and Effort Incentives: Evidence from Professional Soccer," Management Science, INFORMS, vol. 62(6), pages 1645-1667, June.
    2. Eduard Marinov, 2016. "The 2016 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 97-149.
    3. Bilanakos, Christos, 2013. "Career concerns and firm – sponsored general training," Research in Economics, Elsevier, vol. 67(2), pages 117-132.
    4. Hannes Ullrich, 2014. "Leistungsanreize in Unternehmen," DIW Roundup: Politik im Fokus 32, DIW Berlin, German Institute for Economic Research.
    5. Citci, Sadettin Haluk & Inci, Eren, 2016. "The masquerade ball of the CEOs and the mask of excessive risk," Economic Modelling, Elsevier, vol. 58(C), pages 383-393.
    6. Stein, Jeremy C., 2003. "Agency, information and corporate investment," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 2, pages 111-165, Elsevier.
    7. Martinez Leonardo, 2009. "Reputation, Career Concerns, and Job Assignments," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-29, May.
    8. Li, Xiaoyang & Low, Angie & Makhija, Anil K., 2011. "Career Concerns and the Busy Life of the Young CEO," Working Paper Series 2011-4, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    9. Hui Liang James, 2020. "CEO age and tax planning," Review of Financial Economics, John Wiley & Sons, vol. 38(2), pages 275-299, April.
    10. repec:dau:papers:123456789/4126 is not listed on IDEAS
    11. Li, Xiaoyang & Low, Angie & Makhija, Anil K., 2017. "Career concerns and the busy life of the young CEO," Journal of Corporate Finance, Elsevier, vol. 47(C), pages 88-109.
    12. Yim, Soojin, 2013. "The acquisitiveness of youth: CEO age and acquisition behavior," Journal of Financial Economics, Elsevier, vol. 108(1), pages 250-273.
    13. Antoine Renucci & Frédéric Loss, 2004. "When Promotions Induce Good Managers to Be Lazy," Econometric Society 2004 North American Winter Meetings 263, Econometric Society.
    14. Chari, Murali D.R. & David, Parthiban & Duru, Augustine & Zhao, Yijiang, 2019. "Bowman's risk-return paradox: An agency theory perspective," Journal of Business Research, Elsevier, vol. 95(C), pages 357-375.
    15. Antoine Renucci & Frederic Loss, 2002. "The Fallacy of New Business Creation as a Disciplining Device for Managers," FMG Discussion Papers dp398, Financial Markets Group.
    16. Atif Mian, 2008. "Incentives in Markets, Firms, and Governments," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(2), pages 273-306, October.
    17. Frederiksen, Anders, 2013. "Incentives and earnings growth," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 97-107.
    18. Arijit Mukherjee, 2008. "Sustaining implicit contracts when agents have career concerns: the role of information disclosure," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 469-490, June.
    19. Marco Ottaviani & Peter Norman Sorensen, 2002. "Professional Advice: The Theory of Reputational Cheap Talk," Discussion Papers 02-05, University of Copenhagen. Department of Economics.
    20. Leonardo Martinez, 2006. "Reputation and Career Concerns," 2006 Meeting Papers 853, Society for Economic Dynamics.
    21. Botond Koszegi & Wei Li, 2002. "Ambition and Talent," CERS-IE WORKING PAPERS 0214, Institute of Economics, Centre for Economic and Regional Studies.

    More about this item

    Statistics

    Access and download statistics

    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:bla:jemstr:v:30:y:2021:i:1:p:122-138. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    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.