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Losing to Win: Tournament Incentives in the National Basketball Association

Author

Listed:
  • Beck A. Taylor

    (Baylor University)

  • Justin G. Trogdon

    (Duke University)

Abstract

The focus of tournament models has been rank-order compensation schemes whereby participants receive higher payments for higher relative performance, either incrementally or winner-takes-all. Our research focuses on a unique tournament that offers rewards for both winning and losing, specifically the National Basketball Association's regularly scheduled season of games. We examine three NBA seasons to determine whether team performance responded to changes in the underlying tournament incentives provided by the NBA's introduction and restructuring of the lottery system to determine draft order. Our results yield strong evidence that NBA teams are more likely to lose when incentives to lose are present.

Suggested Citation

  • Beck A. Taylor & Justin G. Trogdon, 2002. "Losing to Win: Tournament Incentives in the National Basketball Association," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 23-41, January.
  • Handle: RePEc:ucp:jlabec:v:20:y:2002:i:1:p:23-41
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The NFL Salary Cap and an Incentive to Not Win
      by Phil Miller in Market Power on 2008-04-07 20:22:00
    2. Australian Rules Football and Perverse Incentives
      by Phil Miller in Market Power on 2013-11-20 02:08:34

    Citations

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    Cited by:

    1. Karpov, Alexander, 2015. "A theory of knockout tournament seedings," Working Papers 0600, University of Heidelberg, Department of Economics.
    2. Richard Pomfret & John K. Wilson, 2011. "The Peculiar Economics of Government Policy towards Sport," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(1), pages 85-100.
    3. John Jasina & Kurt Rotthoff, 2012. "A model of promotion and relegation in league sports," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(2), pages 303-318, April.
    4. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    5. Dmitry Ryvkin, 2011. "Fatigue in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 1011-1041, December.
    6. Yupin Yang & Mengze Shi & Avi Goldfarb, 2009. "Estimating the Value of Brand Alliances in Professional Team Sports," Marketing Science, INFORMS, vol. 28(6), pages 1095-1111, 11-12.
    7. 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.
    8. Helena Fornwagner, 2017. "Incentives to lose revisited: The NHL and its tournament incentives," Working Papers 2017-07, Faculty of Economics and Statistics, University of Innsbruck.
    9. Helmut Dietl & Markus Lang & Stephan Werner, 2008. "Corruption in Professional Sumo: An Update on the Study of Duggan and Levitt," Working Papers 0085, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jun 2009.
    10. 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.
    11. Colin Green & Fernando Lozano & Rob Simmons, 2015. "Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions' League Qualifying Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 232(1), pages 30-40, May.
    12. Zimmer Timothy & Kuethe Todd H, 2009. "Testing for Bias and Manipulation in the National Basketball Association Playoffs," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 5(3), pages 1-13, July.
    13. Tony Caporale & Trevor Collier, 2015. "Are We Getting Better or Are They Getting Worse? Draft Position, Strength of Schedule, and Competitive Balance in the National Football League," Journal of Labor Research, Springer, vol. 36(3), pages 291-300, September.
    14. Wright, Mike, 2014. "OR analysis of sporting rules – A survey," European Journal of Operational Research, Elsevier, vol. 232(1), pages 1-8.
    15. Romain Gauriot & Lionel Page, 2014. "Does success breed success? A quasi-experiment on strategic momentum in dynamic contests," QuBE Working Papers 028, QUT Business School.
    16. Mueller-Langer, Frank & Andreoli-Versbach, Patrick, 2013. "Leading-effect vs. Risk-taking in Dynamic Tournaments: Evidence from a Real-life Randomized Experiment," Discussion Papers in Economics 15452, University of Munich, Department of Economics.
    17. Babington, Michael & Goerg, Sebastian J. & Kitchens, Carl, 2017. "Do Tournaments with Superstars Encourage or Discourage Competition?," IZA Discussion Papers 10755, Institute for the Study of Labor (IZA).
    18. Grund, Christian & Höcker, Jan & Zimmermann, Stefan, 2010. "Risk Taking Behavior in Tournaments: Evidence from the NBA," IZA Discussion Papers 4812, Institute for the Study of Labor (IZA).
    19. Stefan Szymanski & Tommaso M. Valletti, 2005. "Promotion and Relegation in Sporting Contests," Rivista di Politica Economica, SIPI Spa, vol. 95(3), pages 3-39, May-June.
    20. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.

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