nep-spo New Economics Papers
on Sports and Economics
Issue of 2017‒02‒26
three papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Fundamentals and Optimal Institutions: The case of US sports leagues By Martín González Eiras; Nikolaj A. Harmon; Martín Rossi
  2. Outcome Uncertainty, Fan Travel, and Aggregate Attendance By Brad R. Humphreys; Thomas J. Miceli
  3. The impact of psychological traits on performance in sequential tournaments: Evidence from a tennis field experiment. By Christoph Bühren; Philip J. Steinberg

  1. By: Martín González Eiras (University of Copenhagen); Nikolaj A. Harmon (University of Copenhagen); Martín Rossi (Department of Economics, Universidad de San Andres)
    Abstract: To shed light on the relation between fundamentals and adopted institutions we examine institutional choice across the \Big Four" US sports leagues. Despite having very similar business models and facing the same economic and legal environment, these leagues exhibit large differences in their use of regulatory institutions such as revenue sharing, salary caps or luxury taxes. We show, theoretically and empirically, that these institutional di erences can be rationalized as optimal responses to di erences in the fundamental characteristics of the sports being played. This provides a cautionary tale against trying to transplant successful institutions across different economic settings.
    Keywords: regulations, institutional choice, sport economics, win probability
    JEL: D02 L10 L83 O17
    Date: 2017–01
  2. By: Brad R. Humphreys (West Virginia University, Department of Economics); Thomas J. Miceli (University of Connecticut, Department of Economics)
    Abstract: The classical Uncertainty of Outcome Hypothesis (UOH) informs economists’ understanding consumer decisions to attend sporting events and models of team revenue generation. Coates, Humphreys and Zhou (2014) developed a reference dependent preference based consumer choice model under uncertainty to motivate the UOH in which loss-averse consumers prefer games with certain outcomes. We develop an alternative model based on a standard expected utility model of fan behavior which incorporates fans’ decisions to travel to away games and aggregates decisions across local and visiting fans. This model generates predictions consistent with the classical UOH and concave team and league-wide total revenue functions.
    Keywords: outcome uncertainty, game attendance, aggregation, travel
    JEL: L83 D12 Z20
    Date: 2016–12
  3. By: Christoph Bühren (University of Kassel); Philip J. Steinberg (University of Wuppertal)
    Abstract: In order to analyze if heterogeneity in psychological traits affects individual performance in sequential tournaments, we conducted a tennis field experiment. In the experiment, we also varied the payment schemes (individual, team, competition) to control for moderating effects of different incentives. Team incentives, risk taking, and self-esteem reduced performance whereas a preference towards competition enhanced it. On average, we observe a second mover advantage. However, individuals’ psychological traits, such as self-esteem or self-efficacy, can turn a second mover into a first mover advantage. Our results shed new light on the discussion of first vs. second mover advantages and performance under pressure. Study findings have implications for psychological requirements of competitive and team tasks in business settings.
    Keywords: Performance under pressure; experiment; psychological traits; second mover advantage; tennis; sequential tournaments
    JEL: C93 D81 Z20 M52
    Date: 2017

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