IDEAS home Printed from https://ideas.repec.org/a/sae/jospec/v16y2015i8p835-852.html
   My bibliography  Save this article

The Louis–Schmelling Paradox and the League Standing Effect Reconsidered

Author

Listed:
  • Brad R. Humphreys
  • Li Zhou

Abstract

Fifty years on we examine two key propositions in Neale’s “Peculiar Economics†: The need for competitors in sport to have opponents of similar ability in order to earn large revenues and the effect of frequent changes sports leagues’ standings on consumer demand. We develop a consumer choice model under uncertainty, and a structural econometric model, to motivate and test these ideas. Unfortunately, neither receives much empirical or theoretical support relative to alternative factors affecting consumer choice like loss aversion and home win preference.

Suggested Citation

  • Brad R. Humphreys & Li Zhou, 2015. "The Louis–Schmelling Paradox and the League Standing Effect Reconsidered," Journal of Sports Economics, , vol. 16(8), pages 835-852, December.
    • Handle: RePEc:sae:jospec:v:16:y:2015:i:8:p:835-852
    DOI: 10.1177/1527002515587260
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1527002515587260
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1527002515587260?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. Nicholas King & P. Dorian Owen & Rick Audas, 2012. "Playoff Uncertainty, Match Uncertainty and Attendance at Australian National Rugby League Matches," The Economic Record, The Economic Society of Australia, vol. 88(281), pages 262-277, June.
    2. Walter C. Neale, 1964. "The Peculiar Economics of Professional Sports," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 78(1), pages 1-14.
    3. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    4. Scott Tainsky & Jason Winfree, 2010. "Short-Run Demand and Uncertainty of Outcome in Major League Baseball," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(3), pages 197-214, November.
    5. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    6. Joel G. Maxcy, 2002. "Rethinking Restrictions On Player Mobility In Major League Baseball," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 145-159, April.
    7. Kevin Mongeon & Jason Winfree, 2012. "Comparison of television and gate demand in the National Basketball Association," Sport Management Review, Taylor & Francis Journals, vol. 15(1), pages 72-79, January.
    8. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    9. Mark Armstrong & Robert Porter (ed.), 2007. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 3, number 1.
    10. Tim Kuypers, 2000. "Information and efficiency: an empirical study of a fixed odds betting market," Applied Economics, Taylor & Francis Journals, vol. 32(11), pages 1353-1363.
    11. Dennis Coates & Brad R. Humphreys & Li Zhou, 2014. "Reference-Dependent Preferences, Loss Aversion, And Live Game Attendance," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 959-973, July.
    12. Jiří LahviÄ ka, 2015. "Using Monte Carlo Simulation to Calculate Match Importance," Journal of Sports Economics, , vol. 16(4), pages 390-409, May.
    13. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
    14. Lei Xinrong & Humphreys Brad R., 2013. "Game importance as a dimension of uncertainty of outcome," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 9(1), pages 25-36, March.
    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. Brad R. Humphreys & Thomas J. Miceli, 2019. "The Peculiar Preferences of Sports Fans: Toward a Preference-Based Motivation for the Uncertainty of Outcome Hypothesis," Journal of Sports Economics, , vol. 20(6), pages 782-796, August.
    2. Lucas M. Besters & Jan (J.C.) van Ours & Martin A. van Tuijl, 2018. "How outcome uncertainty, loss aversion and team quality affect stadium attendance in Dutch professional football," Tinbergen Institute Discussion Papers 18-082/V, Tinbergen Institute.
    3. Ge, Qi, 2018. "Sports sentiment and tipping behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 95-113.
    4. Besters, Lucas, 2018. "Economics of professional football," Other publications TiSEM d9e6b9b7-a17b-4665-9cca-1, Tilburg University, School of Economics and Management.
    5. Pedro Garcia-del-Barrio & J. James Reade, 2022. "Does certainty on the winner diminish the interest in sport competitions? The case of formula one," Empirical Economics, Springer, vol. 63(2), pages 1059-1079, August.
    6. Nola Agha & Thomas Rhoads, 2016. "The League Standing Effect: The Case of a Split Season in Minor League Baseball," Working Papers 2016-13, Towson University, Department of Economics, revised Jul 2016.
    7. Georgios Nalbantis & Tim Pawlowski, 2019. "U.S. Demand for European Soccer Telecasts: A Between-Country Test of the Uncertainty of Outcome Hypothesis," Journal of Sports Economics, , vol. 20(6), pages 797-818, August.
    8. Budzinski, Oliver, 2017. "Sind Wettbewerbe im Profisport Rattenrennen?," Ilmenau Economics Discussion Papers 104, Ilmenau University of Technology, Institute of Economics.
    9. Alexander John Bond & Francesco Addesa, 2020. "Competitive Intensity, Fans’ Expectations, and Match-Day Tickets Sold in the Italian Football Serie A, 2012-2015," Journal of Sports Economics, , vol. 21(1), pages 20-43, January.
    10. Brian M. Mills & Rodney Fort, 2023. "Performance Quality Preference Heterogeneity in Major League Baseball," Journal of Sports Economics, , vol. 24(3), pages 352-373, April.
    11. Humphreys, Brad R & Pérez, Levi, 2019. "Loss aversion, upset preference, and sports television viewing audience size," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 78(C), pages 61-67.
    12. John Charles Bradbury, 2019. "Determinants Of Revenue In Sports Leagues: An Empirical Assessment," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 121-140, January.
    13. Dirk Semmelroth & Bernd Frick & Robert Simmons & Hojun Sung, 2022. "Where to Go Next? Examining the Effect of Franchise Expansion and Location on Game-Level Attendance in Major League Soccer," Journal of Sports Economics, , vol. 23(5), pages 524-547, June.
    14. J. James Reade & Jan C. van Ours, 2024. "Consumer Perceptions Matter: A Case Study of an Anomaly in English Football," Economics Discussion Papers em-dp2024-03, Department of Economics, University of Reading.
    15. Budzinski, Oliver & Gänßle, Sophia & Kunz-Kaltenhäuser, Philipp, 2019. "How does online streaming affect antitrust remedies to centralized marketing? The case of European football broadcasting rights," Ilmenau Economics Discussion Papers 128, Ilmenau University of Technology, Institute of Economics.
    16. António Miguel Martins & Susana Cró, 2018. "The Demand for Football in Portugal," Journal of Sports Economics, , vol. 19(4), pages 473-497, May.
    17. Hojun Sung & Hyunwoong Pyun, 2023. "Disaggregated Attendance Demand: Comparing Daily Ticket Purchasers and Season Ticket Holders in K-League 1," Journal of Sports Economics, , vol. 24(6), pages 717-736, August.
    18. Budzinski, Oliver, 2024. "Financial regulation in sport championships as an anticompetitive institution," Ilmenau Economics Discussion Papers 187, Ilmenau University of Technology, Institute of Economics.
    19. Nicolas Scelles & Qi Peng & Maurizio Valenti, 2021. "Do the Peculiar Economics of Professional Team Sports Apply to Esports? Sequential Snowballing Literature Reviews and Implications," Economies, MDPI, vol. 9(1), pages 1-18, March.
    20. Tim Pawlowski & Georgios Nalbantis & Dennis Coates, 2018. "Perceived Game Uncertainty, Suspense And The Demand For Sport," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 173-192, January.
    21. Besters, Lucas M. & van Ours, Jan C. & van Tuijl, Martin A., 2019. "How outcome uncertainty, loss aversion and team quality affect stadium attendance in Dutch professional football," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 117-127.

    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. Humphreys, Brad & Zhou, Li, 2014. "The Louis-Schmelling Paradox and the League Standing Effect Reconsidered," Working Papers 2014-5, University of Alberta, Department of Economics.
    2. Dennis Coates & Brad R. Humphreys & Li Zhou, 2014. "Reference-Dependent Preferences, Loss Aversion, And Live Game Attendance," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 959-973, July.
    3. Coates, Dennis & Humphreys, Brad & Zhou, Li, 2012. "Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance," Working Papers 2012-7, University of Alberta, Department of Economics.
    4. Besters, Lucas, 2018. "Economics of professional football," Other publications TiSEM d9e6b9b7-a17b-4665-9cca-1, Tilburg University, School of Economics and Management.
    5. Brown, Katie M. & Salaga, Steven, 2018. "NCAA football television viewership: Product quality and consumer preference relative to market expectations," Sport Management Review, Elsevier, vol. 21(4), pages 377-390.
    6. Lucas M. Besters & Jan (J.C.) van Ours & Martin A. van Tuijl, 2018. "How outcome uncertainty, loss aversion and team quality affect stadium attendance in Dutch professional football," Tinbergen Institute Discussion Papers 18-082/V, Tinbergen Institute.
    7. Sung, Hojun & Mills, Brian M., 2018. "Estimation of game-level attendance in major league soccer: Outcome uncertainty and absolute quality considerations," Sport Management Review, Elsevier, vol. 21(5), pages 519-532.
    8. Farai Jena & Barry Reilly, 2016. "Testing the uncertainty outcome hypothesis using data from second tier soccer in Ireland," Applied Economics Letters, Taylor & Francis Journals, vol. 23(18), pages 1257-1260, December.
    9. Besters, Lucas M. & van Ours, Jan C. & van Tuijl, Martin A., 2019. "How outcome uncertainty, loss aversion and team quality affect stadium attendance in Dutch professional football," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 117-127.
    10. Scott M. Kaplan, 2022. "Putting a price on popularity: Evidence from superstars in the National Basketball Association," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1357-1381, July.
    11. Adam Cox, 2018. "Spectator Demand, Uncertainty of Results, and Public Interest," Journal of Sports Economics, , vol. 19(1), pages 3-30, January.
    12. Nola Agha & Thomas Rhoads, 2016. "The League Standing Effect: The Case of a Split Season in Minor League Baseball," Working Papers 2016-13, Towson University, Department of Economics, revised Jul 2016.
    13. Daniel Read & Aaron C.T. Smith & James Skinner, 2021. "A Comparative Analysis of Competitive Balance Between a Closed and an Open League in Rugby League," Journal of Sports Economics, , vol. 22(8), pages 871-892, December.
    14. Moonsup Hyun & Gareth J. Jones & Wonsok (Frank) Jee & Jeremy S. Jordan & James Du & Yohan Lee, 2023. "Revisiting the Uncertainty of Outcome Hypothesis and the Loss Aversion Hypothesis in the National Basketball Association: Adding a Predicted Game Quality Perspective," Journal of Sports Economics, , vol. 24(8), pages 1076-1096, December.
    15. Raul Caruso & Francesco Addesa & Marco Di Domizio, 2019. "The Determinants of the TV Demand for Soccer: Empirical Evidence on Italian Serie A for the Period 2008-2015," Journal of Sports Economics, , vol. 20(1), pages 25-49, January.
    16. Wen-Jhan Jane, 2014. "The Relationship Between Outcome Uncertainties and Match Attendance: New Evidence in the National Basketball Association," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(2), pages 177-200, September.
    17. Jaume García & Plácido Rodríguez & Federico Todeschini, 2020. "The Demand for the Characteristics of Football Matches: A Hedonic Price Approach," Journal of Sports Economics, , vol. 21(7), pages 688-704, October.
    18. Patrick Massey & Shane Massey & Vincent (Vincent Peter) Hogan, 2012. "Analysing Determinants of Match Attendance in the European Rugby Cup," Working Papers 201228, School of Economics, University College Dublin.
    19. Lee, Travis, 2020. "Competitive Balance in the National Hockey League after Unrestricted Free Agency and the Salary Cap," MPRA Paper 108400, University Library of Munich, Germany.
    20. Toma, Pierluigi & Campobasso, Francesco, 2023. "Using data analytics to capture the strategic and financial decision-making of Europe's top football club," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).

    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:sae:jospec:v:16:y:2015:i:8:p:835-852. 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: SAGE Publications (email available below). General contact details of provider: .

    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.