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on Sports and Economics |
| By: | Anurag N. Banerjee; Johan F.M. Swinnen; Alfons Weersink |
| Abstract: | In an e¤ort to stimulate a more exciting and entertaining style of play, the National Hockey Association (NHL) changed the rewards associated with the results of overtime games. Under the new rules, teams tied at the end of regulation both receive a single point regardless of the outcome in overtime. A team scoring in the sudden-death 5-minute overtime period would earn an additional point. Prior to the rule change in the 1999-2000 season, the team losing in overtime would receive no points while the winning team earned 2 points. This paper presents a theoretical model to explain the e¤ect of the rule change on the strategy of play during both the overtime period and the regulation time game. The results suggest that under the new overtime format equally powerful teams will play more offensively in overtime resulting in more games decided by a sudden-death goal. The results also suggest that while increasing the likelihood of attacking in overtime, the rule change would have a perverse e¤ect on the style of play during regulation by causing them to play conservatively for the tie. Empirical data con?rm the theoretical results. The paper also shows that increasing the rewards to a win in regulation time would prevent teams from playing defensively during regular time. |
| Keywords: | Ice Hockey, Game Theory, NHL Overtime Rule |
| JEL: | C72 L83 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:17506&r=spo |
| By: | Kvaløy, Ola (Norsk hotellhøgskole, Institutt for økonomi og ledelse, University of Stavanger); Olsen, Trond E. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | The paper analyzes conditions for implementing incentive schemes based on, respectively joint, relative and independent performance, in a relational contract between a principal and a team of two agents. A main result is that the optimal incentive regime depends on the productivity of the agents, or more precisely on the returns from high effort. This occurs because agents’ productivities affect the principal’s temptation to renege on the relational contract. The analysis suggests that we will see a higher frequency of relative performance evaluation (RPE) - and schemes that lie close to independent performance evaluation - as we move from low-productive to high-productive environments. In particular, it is shown that if effort-productivity is sufficiently high, the optimal scheme for the principal is (for a range of discount factors) a collusion-proof RPE scheme, even if there is no common shock that affects the agents’ output. |
| Keywords: | Incentive schemes; joint performance; relative and independent performance; relational contracts |
| JEL: | J41 |
| Date: | 2005–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2005_007&r=spo |