IDEAS home Printed from https://ideas.repec.org/a/kap/revind/v49y2016i1d10.1007_s11151-015-9494-8.html
   My bibliography  Save this article

Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts

Author

Listed:
  • Liam J. A. Lenten

    (La Trobe University)

Abstract

Efficacy of industry policy implementation is enhanced when governments expedite resolution of private sector uncertainty. This study reinforces the mechanism through which production outcomes improve, via program evaluation analysis from professional sports. An alternative determination rule for allocating picks in reverse-order drafts—fewest games played when eliminated from playoffs—is considered in comparison with the current standard (fewest wins at end-of-season). Elimination timing is estimated via Monte Carlo simulation. Using MLB and NBA data from 2005–2013, results from a quasi-natural experiment show that when a team’s perverse incentive to underperform is effectively removed prior to its final game of the season, its subsequent performance improves significantly.

Suggested Citation

  • Liam J. A. Lenten, 2016. "Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(1), pages 25-41, August.
    • Handle: RePEc:kap:revind:v:49:y:2016:i:1:d:10.1007_s11151-015-9494-8
    DOI: 10.1007/s11151-015-9494-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11151-015-9494-8
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11151-015-9494-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jennifer Brown, 2011. "Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars," Journal of Political Economy, University of Chicago Press, vol. 119(5), pages 982-1013.
    2. Jennifer Brown & Dylan B. Minor, 2014. "Selecting the Best? Spillover and Shadows in Elimination Tournaments," Management Science, INFORMS, vol. 60(12), pages 3087-3102, December.
    3. Joseph Price & Brian P. Soebbing & David Berri & Brad R. Humphreys, 2010. "Tournament Incentives, League Policy, and NBA Team Performance Revisited," Journal of Sports Economics, , vol. 11(2), pages 117-135, April.
    4. Alpert, Abby & Duggan, Mark & Hellerstein, Judith K., 2013. "Perverse reverse price competition: Average wholesale prices and Medicaid pharmaceutical spending," Journal of Public Economics, Elsevier, vol. 108(C), pages 44-62.
    5. Liam J.A. Lenten & Jan Libich & Petr Stehlík, 2013. "Policy Timing and Footballers' Incentives," Journal of Sports Economics, , vol. 14(6), pages 629-655, December.
    6. Beck A. Taylor & Justin G. Trogdon, 2002. "Losing to Win: Tournament Incentives in the National Basketball Association," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 23-41, January.
    7. Jayachandran, Seema, 2014. "Incentives to teach badly: After-school tutoring in developing countries," Journal of Development Economics, Elsevier, vol. 108(C), pages 190-205.
    8. Liam J. A. Lenten & Niven Winchester, 2015. "Secondary Behavioural Incentives: Bonus Points and Rugby Professionals," The Economic Record, The Economic Society of Australia, vol. 91(294), pages 386-398, September.
    9. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    10. Ryan W. Buell & Taly Reich & Michael I. Norton, 2014. ""Last-Place Aversion": Evidence and Redistributive Implications," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 105-149.
    11. Thomas Ashman & R. Alan Bowman & James Lambrinos, 2010. "The Role of Fatigue in NBA Wagering Markets: The Surprising ‘‘Home Disadvantage Situation’’," Journal of Sports Economics, , vol. 11(6), pages 602-613, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bastian Kordyaka & Mario Lackner & Hendrik Sonnabend, 2022. "Can too many cooks spoil the broth? Coordination costs, fatigue, and performance in high‐intensity tasks," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 1065-1085, January.
    2. Lenten, Liam J.A. & Smith, Aaron C.T. & Boys, Noel, 2018. "Evaluating an alternative draft pick allocation policy to reduce ‘tanking’ in the Australian Football League," European Journal of Operational Research, Elsevier, vol. 267(1), pages 315-320.
    3. Kendall, Graham & Lenten, Liam J.A., 2017. "When sports rules go awry," European Journal of Operational Research, Elsevier, vol. 257(2), pages 377-394.
    4. Arlegi, Ritxar & Dimitrov, Dinko, 2020. "Fair elimination-type competitions," European Journal of Operational Research, Elsevier, vol. 287(2), pages 528-535.
    5. Sylvain Béal & Sylvain Ferrières & Eric Rémila & Phillippe Solal, 2016. "An axiomatization of the iterated h-index and applications to sport rankings," Working Papers 2016-11, CRESE.
    6. László Csató, 2020. "The UEFA Champions League seeding is not strategy-proof since the 2015/16 season," Annals of Operations Research, Springer, vol. 292(1), pages 161-169, September.
    7. Csató, László, 2022. "Quantifying incentive (in)compatibility: A case study from sports," European Journal of Operational Research, Elsevier, vol. 302(2), pages 717-726.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Madonia, Greg & Smith, Austin C., 2019. "All-In or checked-out? Disincentives and selection in income share agreements," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 52-67.
    2. Huasheng Song & Ruqu Wang, 2019. "The Balancing Act: The Optimal Assignment of New Players in Sports Leagues," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 525-540, November.
    3. Kendall, Graham & Lenten, Liam J.A., 2017. "When sports rules go awry," European Journal of Operational Research, Elsevier, vol. 257(2), pages 377-394.
    4. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2020. "Are competitors forward looking in strategic interactions? Field evidence from multistage tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 544-565.
    5. Brian Hill, 2018. "Shadow and Spillover Effects of Competition in NBA Playoffs," Journal of Sports Economics, , vol. 19(8), pages 1067-1092, December.
    6. Ira Horowitz, 2018. "Competitive Balance in the NBA Playoffs," The American Economist, Sage Publications, vol. 63(2), pages 215-227, October.
    7. Geoffrey N Tuck & Athol R Whitten, 2013. "Lead Us Not into Tanktation: A Simulation Modelling Approach to Gain Insights into Incentives for Sporting Teams to Tank," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    8. Jed DeVaro & Oliver Gürtler, 2020. "Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 335-376, April.
    9. Robert Butler & Liam J. A. Lenten & Patrick Massey, 2020. "Bonus incentives and team effort levels: Evidence from the “Field”," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(5), pages 539-550, November.
    10. Frimmel, Wolfgang & Horvath, Thomas & Schnalzenberger, Mario & Winter-Ebmer, Rudolf, 2018. "Seniority wages and the role of firms in retirement," Journal of Public Economics, Elsevier, vol. 164(C), pages 19-32.
    11. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    12. Michal Friesl & Liam J. A. Lenten & Jan Libich & Petr Stehlík, 2017. "In search of goals: increasing ice hockey’s attractiveness by a sides swap," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(9), pages 1006-1018, September.
    13. Michael Babington & Sebastian J. Goerg & Carl Kitchens, 2020. "Do Tournaments With Superstars Encourage or Discourage Competition?," Journal of Sports Economics, , vol. 21(1), pages 44-63, January.
    14. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2015. "Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field," IZA Discussion Papers 9564, Institute of Labor Economics (IZA).
    15. Bar-Eli, Michael & Krumer, Alex & Morgulev, Elia, 2020. "Ask not what economics can do for sports - Ask what sports can do for economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 89(C).
    16. Akira Motomura & Kelsey V. Roberts & Daniel M. Leeds & Michael A. Leeds, 2016. "Does It Pay to Build Through the Draft in the National Basketball Association?," Journal of Sports Economics, , vol. 17(5), pages 501-516, June.
    17. Murphy, Richard & Weinhardt, Felix, 2020. "Top of the Class: The Importance of Ordinal Rank," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 87(6), pages 2777-2826.
    18. Brian Hill, 2014. "The Heat Is On," Journal of Sports Economics, , vol. 15(4), pages 315-337, August.
    19. Rudi Stracke & Wolfgang Höchtl & Rudolf Kerschbamer & Uwe Sunde, 2015. "Incentives and Selection in Promotion Contests: Is It Possible to Kill Two Birds with One Stone?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 36(5), pages 275-285, July.
    20. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2024. "The Efficacy of Tournaments for Nonroutine Team Tasks," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 921-948.

    More about this item

    Keywords

    Drafts; Incentives; Modeling; Policy; Sport;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z28 - Other Special Topics - - Sports Economics - - - Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:revind:v:49:y:2016:i:1:d:10.1007_s11151-015-9494-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.