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.