Revenue sharing in a sports league with an open market in playing talent

In this paper we develop an economic model of a professional sports league, in which the teams acquire playing talent in an external market. There have been several earlier formulations of this open model and all rely upon an inappropriately specified revenue function. Team revenues should depend upon the absolute quality of the teams, as well as their relative quality measured by win-percent. An inference that has been cited widely in this literature is that revenue sharing increases competitive inequality. We show that this analysis is flawed. If the revenue function is specified appropriately, gate revenue sharing always reduces competitive inequality

The influence of social pressure and nationality on individual decisions: evidence from the behaviour of referees

This study considers the influences on agents’ decisions in an international context. Using data from six seasons of European cup matches it is found that football referees favour home teams when awarding yellow and red cards. Previous research on referee decisions in national leagues has identified social pressure as a key reason for favouritism. While social pressure is also found to be an important influence in this study, the international context reveals that referee decisions are also influenced by the nationality of the referee and team, and the reputation of the league.

Is there a trade-off between income inequality and corruption? Evidence from Latin America

Conventional economic thinking says corruption and income inequality are positively related. In contrast, this study finds that lower corruption is associated with higher income inequality. The finding of a trade-off is not unexpected in the context of Latin America, for two reasons. First, Latin America has a large informal sector and corruption-reducing polices impose a transaction cost on this sector whose members are among the poorest. Second, redistributive measures, promoted by corrupt elements in society, are often cut back with institutional reform and this serves to worsen inequality. The results imply that corruption-reducing policies aimed at lowering inequality may be misguided.corruption, Latin America, income inequality, instrumental variables, panel data.

The Influence of Social Pressure and Nationality on Individual Decisions: Evidence from the Behaviour of Referees

This study considers the influences on agents’ decisions in an international context. Using data from five seasons of European cup matches it is found that football referees favour home teams when awarding yellow and red cards. Previous research on referee decisions in national leagues has identified social pressure as a key reason for favouritism. While social pressure is also found to be an important influence in this study, the international context reveals that referee decisions are also influenced by the nationality of the referee and club, and the reputation of the league.social pressure, decision-making, referee behaviour, home bias, football

Is there an openness Kuznets curve? Evidence from Latin America

Numerous studies have examined the relationship between income inequality and trade openness. This paper departs from previous work by considering a possible non-linear relationship between trade openness and inequality. The evidence is consistent with the idea of a Kuznets curve: inequality increases until a critical level of openness is reached after which inequality begins to fall. The finding of a non-linear relationship between trade openness and inequality implies that governments in Latin America should introduce redistribution policies, alongside trade liberalisation measures, so as to ease the adverse effects of trade liberalisation.

Strategic Behaviour and Risk Taking in Football

This article develops a dynamic game-theoretic model of optimizing strategic behaviour by football teams. Teams choose continuously between defensive and attacking formations and between a non-violent and a violent playing style. Starting from the end of the match and working backwards, the teams' optimal strategies conditional on the current state of the match are determined by solving a series of two-person non-cooperative subgames. Numerical simulations are used to explore the sensitivity of strategic behaviour to variations in the structural parameters. The model is tested empirically, using English football league data. Teams that are trailing are willing to bear an increased risk of a player dismissal in order to increase the probability of scoring. Teams that are leading or level in scores play cautiously. The scoring rates of teams that are trailing are higher than those of teams that are ahead or level. Stochastic simulations are used to obtain probabilities for match results, conditional upon the state of the match at any stage. The article's main theoretical and empirical results constitute novel, non-experimental evidence that the strategic behaviour of football teams can be rationalized in accordance with game-theoretic principles of optimizing strategic behaviour by agents when payoffs are uncertain and interdependent.

Strategic behaviour and risk taking in football

This article develops a dynamic game-theoretic model of optimizing strategic behaviour by football teams. Teams choose continuously between defensive and attacking formations and between a non-violent and a violent playing style. Starting from the end of the match and working backwards, the teams’ optimal strategies conditional on the current state of the match are determined by solving a series of two-person non-cooperative subgames. Numerical simulations are used to explore the sensitivity of strategic behaviour to variations in the structural parameters. The model is tested empirically, using English football league data. Teams that are trailing are willing to bear an increased risk of a player dismissal in order to increase the probability of scoring. Teams that are leading or level in scores play cautiously. The scoring rates of teams that are trailing are higher than those of teams that are ahead or level. Stochastic simulations are used to obtain probabilities for match results, conditional upon the state of the match at any stage. The article’s main theoretical and empirical results constitute novel, non-experimental evidence that the strategic behaviour of football teams can be rationalized in accordance with game-theoretic principles of optimizing strategic behaviour by agents when payoffs are uncertain and interdependent.

The Influence of Social Pressure and Nationality on Individual Decisions: Evidence from the Behaviour of Referees

This study considers the influences on agents’ decisions in an international context. Using data from five seasons of European cup football matches it is found that referees favour home teams when awarding yellow and red cards. Previous research on referee decisions in national leagues has identified social pressure as a key reason for favouritism. While social pressure is also found to be an important influence in this study, the international setting shows that nationality is another important influence on the decision-making of referees. In considering principal-agent relationships account needs to be taken not only of how agents (referees) decide under social pressure but also of how national identity shapes agents’ decision making.social pressure, nationality, decision-making, referee home bias, football

Effort levels in contests: an empirical application of the Tullock model

Empirical applications of the Tullock contest model are rare, due in part to the non-observability of effort. This paper presents an application of the standard Tullock model in a setting where effort can be observed and explained. A simple contest model is used to predict levels of effort in English soccer, with data on fouls and yellow and red cards used to reflect the effort of teams. Effort levels are found to be higher in matches between evenly balanced teams, and in matches with implications for end-of-season outcomes. The results suggest that the teams’ effort levels are strategic complements.Tullock contest, team sport, strategic complements.