PriceSoebbingBerriHumphreys2010

PriceSoebbingBerriHumphreys2010 - Journal of Sports...

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http://jse.sagepub.com/ Journal of Sports Economics http://jse.sagepub.com/content/11/2/117 The online version of this article can be found at: DOI: 10.1177/1527002510363103 2010 11: 117 Journal of Sports Economics Joseph Price, Brian P. Soebbing, David Berri and Brad R. Humphreys Revisited Tournament Incentives, League Policy, and NBA Team Performance Published by: http://www.sagepublications.com On behalf of: The North American Association of Sports Economists can be found at: Journal of Sports Economics Additional services and information for http://jse.sagepub.com/cgi/alerts Email Alerts: http://jse.sagepub.com/subscriptions Subscriptions: http://www.sagepub.com/journalsReprints.nav Reprints: http://www.sagepub.com/journalsPermissions.nav Permissions: http://jse.sagepub.com/content/11/2/117.refs.html Citations: at SOUTHERN UTAH UNIV LIB on September 5, 2010 jse.sagepub.com Downloaded from
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Conference Papers Tournament Incentives, League Policy, and NBA Team Performance Revisited Joseph Price, 1 Brian P. Soebbing, 2 David Berri, 3 and Brad R. Humphreys 2 Abstract Taylor and Trogdon found evidence of shirking under some, but not all, draft lottery systems used in three different National Basketball Association (NBA) seasons. The authors use data from all NBA games played from 1977 to 2007 and a fixed effects model to control for unobservable team and season heterogeneity to extend this research. The authors find that NBA teams were more likely to intentionally lose games at the end of the regular season during the seasons where the incentives to finish last were the largest. Keywords tanking, NBA, tournament theory Introduction Agents respond to economic incentives. In the office, on professional golf tours, and in the National Basketball Association (NBA), effort put forth by employees, profes- sional athletes, and professional sports teams depends on the economic incentives given to them. Lazear and Rosen (1981) developed a model in which organizations 1 Brigham Young University, Provo, UT, USA 2 University of Alberta, Edmonton, Canada 3 Southern Utah University, Cedar City, UT, USA Corresponding Author: Brad R. Humphreys, 8-14 HM Tory, University of Alberta, Edmonton, AB T6G 2H4, Canada. Email: [email protected] Journal of Sports Economics 11(2) 117-135 ª The Author(s) 2010 Reprints and permission: sagepub.com/journalsPermissions.nav DOI: 10.1177/1527002510363103 http://jse.sagepub.com 117 at SOUTHERN UTAH UNIV LIB on September 5, 2010 jse.sagepub.com Downloaded from
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compensate agents based on relative performance, rather than on marginal revenue product as neoclassical economics predicts. The rank-order incentive structure at the heart of this model, called tournament theory, explains why chief executive officers (CEOs) earn hundreds of times more than rank and file factory workers and why the winner of a professional golf tournament cashes a check worth twice the amount won by the second place finisher. Frick (2003) points out that tournament theory applies to both individual and team sports because the theory explains both compen- sation and effort put forth in contests. Preston and Syzmanski (2003) show that, in
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