Behavior and Incentives in Economics: the Case of Soccer

INTRODUCTION TO THE COURSE:

This course takes soccer as an illustration of theories and empirical evidence related to economic incentives and behaviour. Soccer is widely followed and generates a great amount of information. This knowledge is used in a systematic way to explore the validity of economic theories and to empirically test predictions generated by these theories.

REQUIREMENTS:

Basic knowledge of Economics

CONTENTS:

1. Demand and Supply in the Soccer Market

• Demand: preferences, elasticity, addiction.
• Social preferences.
• The two roles of preferences: explanation for individual decisions and metric of welfare.
• Costs and Performance: the economics of stars and outliers. The role of talent.
• The soccer industry: players, fans and media.

2. Markets and Organizations in Soccer

• Competition and anti-trust in soccer.
• Competitive balance in soccer.
• Home-field advantage.
• Institutions and regulations that internalize externalities: leagues and federations.
• Salary caps and revenue sharing rules.

3. Cognitive Power in Soccer

• Uncertainty: predictions and ex-post rationalization.
• Believes and judgement in the soccer industry.
• Share price movements and betting.
• Game theory in soccer: simultaneous and sequential games.
• Rationality: shooting penalties, mixed strategies and behavioral economics.

4. Individuals and groups in Soccer

• Rules and referee behaviour: creating, enforcing and influencing the rules.
• Corruption in soccer.
• Team production and incentives for individuals and teams.
• The role of the manager. Efficiency measurement in soccer.
• Tactics: evolutionary economics.

5. Efficiency in Soccer

• The costs and benefits of organizing big sports events such as Soccer World Cups.
• Governance of for-profit and non-profit soccer clubs.
• The Player Transfer Market: analogy to takeovers and auctions.
• Is contemporary soccer sustainable?
• Determinants of national success in soccer. Is it a coincidence that Spain excels in soccer when its economy is in worst shape?