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The Efficiency of the NASCAR Reward System

Author

Listed:
  • Craig A. Depken II
  • Dennis P. Wilson

    (University of Texas at Arlington)

Abstract

This article reports empirical tests of the hypotheses developed by Peter von Allmen regarding the inefficiency of a nonlinear reward system in NASCAR. Using season level data from 1949 through 2001, we find that there is less than a one-to-one relationship between the concentration of performance and the concentration of dollar rewards, offering support for von Allmen’s sabotage hypothesis. Granger causality tests indicate that performance-points concentration does not Granger cause winnings concentration, and vice versa. This detracts from von Allmen’s cost hypothesis, although not necessarily from his intuition regarding the hypothesis’s validity.

Suggested Citation

  • Craig A. Depken II & Dennis P. Wilson, 2004. "The Efficiency of the NASCAR Reward System," Journal of Sports Economics, , vol. 5(4), pages 371-386, November.
    • Handle: RePEc:sae:jospec:v:5:y:2004:i:4:p:371-386
    DOI: 10.1177/1527002503260559
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    References listed on IDEAS

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    1. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
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    4. Andrews, Donald W K, 1991. "Heteroskedasticity and Autocorrelation Consistent Covariance Matrix Estimation," Econometrica, Econometric Society, vol. 59(3), pages 817-858, May.
    5. David F. Hendry, 2013. "Econometric Modelling: The ‘Consumption Function’ In Retrospect," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 495-522, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jeremy T. Schwartz & Justin P. Isaacs & Anthony M. Carilli, 2007. "To Race or to Place?," Journal of Sports Economics, , vol. 8(6), pages 633-641, December.
    2. Brad Humphreys & Bernd Frick, 2019. "Prize Structure and Performance: Evidence from NASCAR," Economies, MDPI, vol. 7(4), pages 1-13, October.
    3. Alan Deck & Cary Deck & Zhen Zhu, 2014. "Decision Making in a Sequential Game," Journal of Sports Economics, , vol. 15(2), pages 132-149, April.
    4. Dennis Coates & Petr Parshakov, 2016. "Team Vs. Individual Tournaments: Evidence From Prize Structure In Esports," HSE Working papers WP BRP 138/EC/2016, National Research University Higher School of Economics.
    5. Peter A. Groothuis & Jana D. Groothuis & Kurt W. Rotthoff, 2011. "Time on Camera," Journal of Sports Economics, , vol. 12(5), pages 561-570, October.
    6. David M. Yaskewich, 2017. "Heterogeneous Ability and Risk Taking in a Rank-Order Tournament," Journal of Sports Economics, , vol. 18(8), pages 803-830, December.
    7. Brad R. Humphreys & Jane E. Ruseski, 2010. "Problems With Data on the Sport Industry," Journal of Sports Economics, , vol. 11(1), pages 60-76, February.
    8. Craig A. Depken II & Matthew Hood & Ernest King, 2017. "Consistency and Momentum in NASCAR," Journal of Sports Economics, , vol. 18(6), pages 601-621, August.
    9. Shenkman, Evgenia & Coates, Dennis & Chadov, Aleksei & Parshakov, Petr, 2022. "Team vs. individual tournament: An organizer's dilemma," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 476-492.
    10. Jason P. Berkowitz & Craig A. Depken II & Dennis P. Wilson, 2011. "When Going in Circles is Going Backward: Outcome Uncertainty in NASCAR," Journal of Sports Economics, , vol. 12(3), pages 253-283, June.

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