nep-spo New Economics Papers
on Sports and Economics
Issue of 2023‒11‒20
three papers chosen by
Humberto Barreto, DePauw University

  1. Has financial fair play changed European football? By Ariela Caglio; Sebastien Laffitte; Donato Masciandaro; Gianmarco Ottaviano
  2. Disequilibrium Play in Tennis By Axel Anderson; Jeremy Rosen; John Rust; Kin-ping Wong
  3. A sad lesson from the hammer-nail game: strength is better than dexterity. By Gisèle Umbhauer

  1. By: Ariela Caglio; Sebastien Laffitte; Donato Masciandaro; Gianmarco Ottaviano
    Abstract: In 2011 UEFA, the governing body of European football, introduced the Financial Fair Play Regulation (FFPR), consisting of a set of financial restraints to be met by clubs as a prerequisite for participation to its competitions. The aim of the FFPR was to introduce financial discipline into the clubs' decision-making processes, and ultimately protect the long-term viability of the European football industry. The reform was criticized because of possible unintended detrimental consequences. In particular, Peeters and Szymanski 2014 provided a model-based ex-ante simulation analysis showing that the reform would increase the profitability of clubs, but also tilt the competitive balance in favor of the top teams, thus reducing the interest of fans and investors as one of the main attractions in sports is precisely that the best team does not always win. Exploiting an original dataset between the seasons 2007-2008 and 2019-2020, we provide an ex-post econometric evaluation of the effects of the introduction of the FFPR revealing causal evidence that largely vindicates those ex-ante predictions.
    Keywords: accounting measurement, Financial Fair Play (FFP), financial sustainability, teama??s quality, competitive balance
    Date: 2023–10–11
  2. By: Axel Anderson (Department of Economics, Georgetown University); Jeremy Rosen (Department of Economics, Georgetown University); John Rust (Department of Economics, Georgetown University); Kin-ping Wong (Digonex)
    Abstract: Are the serves of the world’s best tennis pros consistent with the theoretical predictions of Nash equilibrium in mixed strategies? We analyze their serve direction choices (to the receiver’s left, right or body) with data from an online database called the Match Charting Project. Using a new methodology, we test and decisively reject a key implication of a mixed strategy Nash equilibrium, namely, that the probability of winning a service game is the same for all serve directions. We also use dynamic programming (DP) to numerically solve for the best-response serve strategies in models of the service game of tennis estimated for individual server-receiver pairs, such as Novak Djokovic serving to Rafael Nadal. We show that for most elite professional servers, the DP serve strategy significantly increases their service game win probability compared to the mixed strategies they actually use, which we estimate using flexible reduced-form logit models. Stochastic simulations verify that our results are robust to estimation error.
    Keywords: tennis, games, Nash equilibrium, Minimax theorem, constant sum games, mixed strategies, dynamic directional games, binary Markov games, dynamic programming, structural estimation, muscle memory, magnification effect
    JEL: C61 C73 L21
    Date: 2023–07–18
  3. By: Gisèle Umbhauer
    Abstract: In this second paper on the hammer-nail game, we confront strength with dexterity. The hammer-nail game, a game played in the French TV show “Fort Boyard”, goes as follows: two players are in front of a nail slightly driven into a wooden support. Both have a hammer and in turn hit the nail. The winner is the first player able to fully drive the nail into the support. A player is of strength f if he is able, with one swing of the hammer, to drive the nail at most f millimeters into the support. A player is of non dexterity e if he is unable to hammer smoothly, so that, with one swing of the hammer, he drives the nail at least e millimeters into the support, with \uD835\uDC52 > 1. In a previous paper, we mainly studied the impact of strength, both players being of high dexterity (\uD835\uDC52 = 1), and we transformed the hammer-nail game into a Nim game with incomplete information on strength. In this paper we study the impact of both strength and dexterity. We confront two players of different strength and dexterity and namely show a sad result: strength is more useful than dexterity to win the game. We also study the behavior in front of incomplete information, either on strength or on dexterity.
    Keywords: Nim game, crossed cycles, Fort Boyard, subgame perfect Nash equilibrium, strength, dexterity, incomplete information, heuristics of behavior.
    JEL: C72
    Date: 2023

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