School of International Trade and Economics - University of International Business and Economics

Seminars & Conferences

Nov. 7th, Lex Zhao, Kobe University

Lecturer: Lex Zhao, Kobe University
Time:Nov. 7th, Thursday, 10:00 am-11:30 am
Venue:Boxue 1222
Topic:Team-sports competition and incentives
Abstract:This simple paper examines team competition under both simultaneous and sequential tasks. The model can identify some characteristics of a championship team. We demonstrate that, (i) A championship prize or an individual award such as the most valuable player (MVP) award creates a horizontal linkage among otherwise independent teams and players, intensifying competition by inducing higher efforts from players and eventually lowering the manager’s loss from agent shirking; (ii) Draft systems and salary caps that decrease the talent difference among teams can reduce shirking, while free agency does the opposite; (iii) Higher-level competitions (with more difficult tasks) require more costs for the principal. These predictions match well with some of the real-life sports competitions.