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Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts


  • Liam J. A. Lenten

    () (La Trobe University)


Abstract Efficacy of industry policy implementation is enhanced when governments expedite resolution of private sector uncertainty. This study reinforces the mechanism through which production outcomes improve, via program evaluation analysis from professional sports. An alternative determination rule for allocating picks in reverse-order drafts—fewest games played when eliminated from playoffs—is considered in comparison with the current standard (fewest wins at end-of-season). Elimination timing is estimated via Monte Carlo simulation. Using MLB and NBA data from 2005–2013, results from a quasi-natural experiment show that when a team’s perverse incentive to underperform is effectively removed prior to its final game of the season, its subsequent performance improves significantly.

Suggested Citation

  • Liam J. A. Lenten, 2016. "Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(1), pages 25-41, August.
  • Handle: RePEc:kap:revind:v:49:y:2016:i:1:d:10.1007_s11151-015-9494-8
    DOI: 10.1007/s11151-015-9494-8

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    References listed on IDEAS

    1. Jennifer Brown, 2011. "Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars," Journal of Political Economy, University of Chicago Press, vol. 119(5), pages 982-1013.
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    3. Joseph Price & Brian P. Soebbing & David Berri & Brad R. Humphreys, 2010. "Tournament Incentives, League Policy, and NBA Team Performance Revisited," Journal of Sports Economics, , vol. 11(2), pages 117-135, April.
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    6. Liam J.A. Lenten & Jan Libich & Petr Stehlík, 2013. "Policy Timing and Footballers' Incentives," Journal of Sports Economics, , vol. 14(6), pages 629-655, December.
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    8. Jayachandran, Seema, 2014. "Incentives to teach badly: After-school tutoring in developing countries," Journal of Development Economics, Elsevier, vol. 108(C), pages 190-205.
    9. Liam J. A. Lenten & Niven Winchester, 2015. "Secondary Behavioural Incentives: Bonus Points and Rugby Professionals," The Economic Record, The Economic Society of Australia, vol. 91(294), pages 386-398, September.
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    Cited by:

    1. Sylvain Béal & Sylvain Ferrières & Eric Rémila & Philippe Solal, 2016. "An axiomatization of the iterated h-index and applications to sport rankings," Working Papers hal-01394818, HAL.
    2. repec:eee:ejores:v:267:y:2018:i:1:p:315-320 is not listed on IDEAS
    3. Kendall, Graham & Lenten, Liam J.A., 2017. "When sports rules go awry," European Journal of Operational Research, Elsevier, vol. 257(2), pages 377-394.

    More about this item


    Drafts; Incentives; Modeling; Policy; Sport;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z28 - Other Special Topics - - Sports Economics - - - Policy


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