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Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’

Author

Listed:
  • James E. McClure

    (Department of Economics, Ball State University)

  • Lee C. Spector

    (Department of Economics, Ball State University)

Abstract

Tournaments have long been used as a resource allocation device. Regardless of the margin of victory, a tournament's champion is typically rewarded far more handsomely than are its losers. For this reason, a tournament can generally be expected to elicit spectacular levels of performance from a group of competitors; performances in professional golf tournaments are an example. Surprisingly, the analysis in this paper indicates the existence of no significant relationship between the rewards and performances of participants in the NCAA basketball tournament. To explain this finding we allude to the classic principal-agent problem.

Suggested Citation

  • James E. McClure & Lee C. Spector, 1996. "Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’," Working Papers 199601, Ball State University, Department of Economics, revised Jan 1997.
    • Handle: RePEc:bsu:wpaper:199601
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    References listed on IDEAS

    as
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    Cited by:

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    2. 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.
    3. Furqan, Mehreen & Ijaz, Maha, 2014. "Publication Trends and Methodological Advancements in the Area of Agency Cost," Sukkur IBA Journal of Management and Business, Sukkur IBA University, vol. 1(1), pages 57-86, October.

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