The Economics of Professional Boxing Contracts
This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxerâ€™s â€œpurseâ€ is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption-smoothing considerations alleviate this problem, savings act as further insurance, and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market and by the prevalence of â€œcasualâ€ boxing fans.
Volume (Year): 1 (2000)
Issue (Month): 4 (November)
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