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Favouritism and financial incentives: A natural experiment

Author

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  • Robert Witt

    (University of Surrey)

  • Neil Rickman

    (University of Surrey)

Abstract

Principals who exercise favouritism towards certain agents may harm those who are not so favoured. Other papers have produced evidence consistent with the presence of such favouritism but have been unable to consider methods for controlling it. We address this issue in the context of a natural experiment from English soccer, where one particular league introduced professional referees in 2001-02, thereby changing the financial incentives and monitoring regime faced by these referees. Because the change was not effected in all leagues, the ‘experiment’ has both cross-sectional and intertemporal dimensions. We study the effects of professional referees on an established measure of referee bias: length of injury time in close matches. We find that referees exercised favouritism prior to professionalism but not afterwards, having controlled for selection and soccer-wide effects. The results are consistent with a financial incentive effect as a result of professional referees and indicate that subtle aspects of principal-agent relationships (such as favouritism) are amenable to contractual influence.

Suggested Citation

  • Robert Witt & Neil Rickman, 2005. "Favouritism and financial incentives: A natural experiment," School of Economics Discussion Papers 0105, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:0105
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    File URL: https://repec.som.surrey.ac.uk/2005/DP01-05.pdf
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    References listed on IDEAS

    as
    1. Sutter, Matthias & Kocher, Martin G., 2004. "Favoritism of agents - The case of referees' home bias," Journal of Economic Psychology, Elsevier, pages 461-469.
    2. John Knowles & Nicola Persico & Petra Todd, 2001. "Racial Bias in Motor Vehicle Searches: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 203-232, February.
    3. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    4. M. Grubb, 2003. "Editorial," Climate Policy, Taylor & Francis Journals, vol. 3(3), pages 189-190, September.
    5. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, vol. 67(3), pages 349-367, March.
    6. Gray, Alastair & Rickman, Neil & Fenn, Paul, 1999. "Professional Autonomy and the Cost of Legal Aid," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 545-558, July.
    7. Prendergast, Canice & Topel, Robert H, 1996. "Favoritism in Organizations," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 958-978, October.
    8. Zantman, Wilfried, 2002. " Constitutional Design and Regional Favoritism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 71-93.
    9. Luis Garicano & Ignacio Palacios-Huerta & Canice Prendergast, 2005. "Favoritism Under Social Pressure," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 208-216, May.
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    Cited by:

    1. Donna Harris & Benedikt Herrmann & Andreas Kontoleon, 2009. "Two's Company, Three's a Group: The impact of group identity and group size on in-group favouritism," Environmental Economy and Policy Research Working Papers 41.2009, University of Cambridge, Department of Land Economics, revised 2009.
    2. repec:lan:wpaper:3946 is not listed on IDEAS
    3. Christian Deutscher & Eugen Dimant & Brad R. Humphreys, 2017. "Match Fixing and Sports Betting in Football: Empirical Evidence from the German Bundesliga," Working Papers 17-01, Department of Economics, West Virginia University.
    4. Bryson, Alex & Buraimo, Babatunde & Simmons, Rob, 2011. "Do salaries improve worker performance?," Labour Economics, Elsevier, vol. 18(4), pages 424-433, August.
    5. Thomas Dohmen & Jan Sauermann, 2016. "Referee Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 679-695, September.
    6. Peter Dawson, 2014. "Refereeing and infringement of the rules," Chapters,in: Handbook on the Economics of Professional Football, chapter 24, pages 401-418 Edward Elgar Publishing.
    7. Babatunde Buraimo & David Forrest & Robert Simmons, 2007. "The Twelfth Man? Refereeing Bias in English and German Soccer," Working Papers 0707, International Association of Sports Economists;North American Association of Sports Economists.
    8. Reilly, Barry & Witt, Robert, 2011. "Disciplinary sanctions in English Premiership Football: Is there a racial dimension?," Labour Economics, Elsevier, vol. 18(3), pages 360-370, June.
    9. Barry Reilly & Robert Witt, 2016. "Disciplinary Sanction and Social Pressure in English Premiership Soccer," Working Paper Series 8816, Department of Economics, University of Sussex.
    10. Andrés Picazo-Tadeo & Francisco Gónzalez-Gómez & Jorge Guardiola Wanden-Berghe, 2011. "Referee home bias due to social pressure. Evidence from Spanish football," Working Papers 1119, Department of Applied Economics II, Universidad de Valencia.
    11. Dawson, Peter & Dobson, Stephen, 2010. "The influence of social pressure and nationality on individual decisions: Evidence from the behaviour of referees," Journal of Economic Psychology, Elsevier, vol. 31(2), pages 181-191, April.
    12. Roberto Antonietti, 2008. "Il ruolo economico dell’arbitro di calcio: una rassegna della letteratura e alcune questioni aperte," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 4(3), pages 75-103, Dicembre.
    13. Barry Reilly & Robert Witt, 2016. "Disciplinary Sanction and Social Pressure in English Premiership Soccer," Working Paper Series 08816, Department of Economics, University of Sussex.
    14. repec:lan:wpaper:3661 is not listed on IDEAS
    15. Juan Mendoza & Andrés Rosas, 2013. "Referee Bias in Professional Soccer: Evidence from Colombia," VNIVERSITAS ECONÓMICA 011059, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    16. Andrews, Matt & Harrington, Peter, 2016. "Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them," Working Paper Series 16-009, Harvard University, John F. Kennedy School of Government.
    17. Katherine G. Yewell & Steven B. Caudill & Franklin G. Mixon, Jr., 2014. "Referee Bias and Stoppage Time in Major League Soccer: A Partially Adaptive Approach," Econometrics, MDPI, Open Access Journal, vol. 2(1), pages 1-19, February.
    18. Francesc Trillas Jané, 2016. "Behavioral Regulatory Agencies," Working Papers wpdea1606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    19. Dey, Oindrila & Banerjee, Swapnendu, 2015. "Endogenous favouritism with status incentives: A model of optimum inefficiency," MPRA Paper 62828, University Library of Munich, Germany.
    20. Andrés J. Picazo-Tadeo & Francisco González-Gómez & Jorge Guardiola, 2011. "The importance of time in referee home bias due to social pressure. Evidence from Spanish football," FEG Working Paper Series 03/11, Faculty of Economics and Business (University of Granada).
    21. Dey, Oindrila & Banerjee, Swapnendu, 2013. "Status, incentives and random favouritism," MPRA Paper 49188, University Library of Munich, Germany.

    More about this item

    Keywords

    Favouritism; financial incentives; soccer; referee;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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