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Risk and uncertainty in team building: Evidence from a professional basketball market

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  • Schmidt, Martin B.

Abstract

While recent surveys suggest that team oriented production has become commonplace within the production process, its impact on worker productivity is less clear. Both the theoretical and empirical literature highlight the disparate effects working in teams may have worker productivities. The present paper investigates how well management is able to internalize these uncertain effects. Using National Basketball Association game-by-game data over 36 seasons, we estimate each team’s ex-post labor portfolio and find that, beginning in the mid-1990s, NBA teams are able to reduce their portfolio’s performance risk. Further the timing of the reduction coincides with the rise in basketball analytics.

Suggested Citation

  • Schmidt, Martin B., 2021. "Risk and uncertainty in team building: Evidence from a professional basketball market," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 735-753.
    • Handle: RePEc:eee:jeborg:v:186:y:2021:i:c:p:735-753
    DOI: 10.1016/j.jebo.2020.11.001
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    1. Humphreys, Brad R. & Ruseski, Jane E., 2023. "Air quality and employee performance in teams: Evidence from the NFL," Economics & Human Biology, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Expected return; Uncertainty; Portfolio; Team production; Peer effects; National basketball association;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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