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Cost Incentives in European Football

Author Info

  • Feddersen, Arne

    ()

    (University of Southern Denmark)

  • Humphreys, Brad

    ()

    (University of Alberta, Department of Economics)

  • Soebbing, Brian

    ()

    (Louisiana State University)

Abstract

We examine the effects of financial incentives on effort supplied by football clubs in European domestic leagues. Tournament theory predicts that the amount of effort supplied varies with returns to effort. We analyze variation in 31,746 domestic league match outcomes in ten European leagues over eleven seasons, exploiting the actual standings on the league table to generate variables reflecting incentives to provide effort in each match. Results from ordered logit regressions indicate that the effort implied by observed match outcomes support the predictions of tournament theory in this setting; clubs supply more or less effort in response to changes in incentives.

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File URL: https://sites.ualberta.ca/~econwps/2012/wp2012-25.pdf13
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Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2012-13.

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Length: 45 pages
Date of creation: 01 Jul 2012
Date of revision:
Handle: RePEc:ris:albaec:2012_013
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Keywords: effort supply; football; UEFA Champions League;

Find related papers by JEL classification:

  • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
  • 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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  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 841-64, October.
  2. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-24, December.
  3. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 512-529, Winter.
  4. Helmut M. Dietl & Markus Lang & Stephan Werner, 2010. "Corruption in Professional Sumo: An Update on the Study of Duggan and Levitt," Journal of Sports Economics, The North American Association of Sports Economists, vol. 11(4), pages 383-396, August.
  5. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 155-79, April.
  6. Joseph Price & Brian P. Soebbing & David Berri & Brad R. Humphreys, 2010. "Tournament Incentives, League Policy, and NBA Team Performance Revisited," Journal of Sports Economics, The North American Association of Sports Economists, vol. 11(2), pages 117-135, April.
  7. repec:sae:ilrrev:v:43:y:1990:i:3:p:74-88 is not listed on IDEAS
  8. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  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. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
  11. Sonia Falconieri & Frédéric Palomino & József Sákovics, 2004. "Collective Versus Individual Sale of Television Rights in League Sports," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 833-862, 09.
  12. Daniel R. Marburger, 2003. "Does the Assignment of Property Rights Encourage or Discourage Shirking?," Journal of Sports Economics, The North American Association of Sports Economists, vol. 4(1), pages 19-34, February.
  13. Michael T. Maloney & Robert E. McCormick, 2000. "The Response of Workers to Wages in Tournaments," Journal of Sports Economics, The North American Association of Sports Economists, vol. 1(2), pages 99-123, May.
  14. Tim Pawlowski & Christoph Breuer & Arnd Hovemann, 2010. "Top Clubs' Performance and the Competitive Situation in European Domestic Football Competitions," Journal of Sports Economics, The North American Association of Sports Economists, vol. 11(2), pages 186-202, April.
  15. 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.
  16. David J. Berri & Anthony C. Krautmann, 2006. "Shirking on the Court: Testing for the Incentive Effects of Guaranteed Pay," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 536-546, July.
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Cited by:

  1. Budzinski, Oliver & Pawlowski, Tim, 2014. "The behavioural economics of competitive balance: Implications for league policy and championship management," Ilmenau Economics Discussion Papers 89, Ilmenau University of Technology, Institute of Economics.
  2. Budzinski, Oliver & Müller-Kock, Anika, 2016. "Market power and media revenue allocation in professonal sports: The case of formula one," Ilmenau Economics Discussion Papers 102, Ilmenau University of Technology, Institute of Economics.
  3. Pawlowski, Tim & Budzinski, Oliver, 2014. "Competitive balance and attention level effects: Theoretical considerations and preliminary evidence," Ilmenau Economics Discussion Papers 84, Ilmenau University of Technology, Institute of Economics.
  4. Green, Colin P. & Lozano, Fernando A. & Simmons, Rob, 2015. "Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions League Qualifying Rules," IZA Discussion Papers 8950, Institute for the Study of Labor (IZA).
  5. Lahvicka, Jiri, 2012. "Using Monte Carlo simulation to calculate match importance: the case of English Premier League," MPRA Paper 40998, University Library of Munich, Germany.

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