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Prize Structure and Performance: Evidence from NASCAR

Author

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  • Frick, Bernd

    () (University of Paderborn)

  • Humphreys, Brad

    () (University of Alberta, Department of Economics)

Abstract

The predictions that emerge from tournament theory have been tested in a number of sports-related settings. Since sporting events involving individuals (golf, tennis, running, auto racing) feature rank order tournaments with relatively large payoffs and easily observable outcomes, sports is a natural setting for such tests. In this paper, we test the predictions of tournament theory using a unique race-level data set from NASCAR. Most of the previous tests of tournament theory using NASCAR data have used either season level data or race level data from a few seasons. Our empirical work uses race level NASCAR data for 1,114 races over the period 1975-2009. Our results support the predictions of tournament theory: the larger the spread in prizes paid in the race, measured by the standard deviation of prizes paid or the interquartile range of prizes paid, the higher the average speed in the race. Our results account for the length of the track, the number of entrants, the number of caution flags, and unobservable year and week heterogeneity.

Suggested Citation

  • Frick, Bernd & Humphreys, Brad, 2011. "Prize Structure and Performance: Evidence from NASCAR," Working Papers 2011-12, University of Alberta, Department of Economics.
  • Handle: RePEc:ris:albaec:2011_012
    as

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    File URL: https://sites.ualberta.ca/~econwps/2011/wp2011-12.pdf
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    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
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    Cited by:

    1. XiaoGang Che & Brad R. Humphreys, 2013. "Earnings and performance in women’s skiing," Chapters,in: Handbook on the Economics of Women in Sports, chapter 6, pages 115-131 Edward Elgar Publishing.

    More about this item

    Keywords

    NASCAR; tournament theory;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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