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Favouritism and Financial Incentives: A Natural Experiment

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  • Witt, Robert
  • Rickman, Neil
Abstract
Principals who exercise favouritism towards certain agents may harm those who are not so favoured. Other papers have produced evidence consistent with the presence of such favouritism but have been unable to consider methods for controlling it. We address this issue in the context of a natural experiment from English soccer, where one particular league introduced professional referees in 2001-02, thereby changing the financial incentives and monitoring regime faced by these referees. Because the change was not effected in all leagues, the ?experiment? has both cross-sectional and intertemporal dimensions. We study the effects of professional referees on an established measure of referee bias: length of injury time in close matches. We find that referees exercised favouritism prior to professionalism but not afterwards, having controlled for selection and soccer-wide effects. The results are consistent with a financial incentive effect as a result of professional referees and indicate that subtle aspects of principal-agent relationships (such as favouritism) are amenable to contractual influence.

Suggested Citation

  • Witt, Robert & Rickman, Neil, 2005. "Favouritism and Financial Incentives: A Natural Experiment," CEPR Discussion Papers 4968, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4968
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    References listed on IDEAS

    as
    1. Sutter, Matthias & Kocher, Martin G., 2004. "Favoritism of agents - The case of referees' home bias," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 461-469, August.
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    6. Gray, Alastair & Rickman, Neil & Fenn, Paul, 1999. "Professional Autonomy and the Cost of Legal Aid," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 545-558, July.
    7. Prendergast, Canice & Topel, Robert H, 1996. "Favoritism in Organizations," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 958-978, October.
    8. Wilfried Zantman, 2002. "Constitutional Design and Regional Favoritism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 71-93, January.
    9. Luis Garicano & Ignacio Palacios-Huerta & Canice Prendergast, 2005. "Favoritism Under Social Pressure," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 208-216, May.
    10. Dohmen, Thomas, 2005. "Social Pressure Influences Decisions of Individuals: Evidence from the Behavior of Football Referees," IZA Discussion Papers 1595, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    Favouritism; Financial incentives; Soccer; Referee;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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