Why football players may benefit from the ‘shadow of the transfer system’

Transfer restrictions have a long tradition in professional sports but came under heavy attack in recent years (e.g. Bosman ruling, Monti system). Based on a bargaining model with stochastic player productivity, we show that less restrictive transfer rules reallocate ex post bargaining power from players to clubs. This reallocation is efficient and in the ex ante self-interest of players. The right to charge transfer fees enables clubs to insure their players. The players, in turn, benefit by converting risky future income into riskless current income. Overall, player utility is higher under more than under less restrictive transfer rules

Entrepreneurial Discovery and the Demmert/Klein Experiment: Another Attempt at Creating the Proper Context

Friedrich Hayek conjectured that the free enterprise system is the most effective in making discoveries, and Israel Kirzner refines the conjecture by saying that profit opportunities evoke entrepreneurial discovery. Demmert and Klein (2003) present the first attempt to demonstrate the Hayek/Kirzner conjecture. On the whole, Demmert and Klein (2003) classify the results as disappointing but fruitful. In contrast we argue that additional experimental evidence might yield a demonstration of the conjecture. We continued the diligence and good-faith effort started by Demmert and Klein (2003) to devise an experimental setting that would create a genuine context for entrepreneurial discovery, yet the conjecture eludes our efforts at controlling the experiment. We duplicated the experiment at a Business School in Germany, with two simple variations. First, Demmert and Klein (2003) recruited only male students. We include male and female students. Second, Demmert and Klein (2003) used a payment schedule that includes a flat rate for participation and additional earnings depending on the presented performance. We drop the flat rate and slightly reduce the earnings per unit outperformance. Our results show that overall money matters. Our results are rather like those of Demmert and Klein (2003) and do not seem to be influenced by a baseline payment. Moreover, there are gender specific divergences showing male students earning significant higher additional earnings than their female fellow students. Copyright Springer Science + Business Media, Inc. 2005cross country divergences, entrepreneurial discovery, gender specifica, monetary rewards,