Favouritism and financial incentives: A natural experiment∗
نویسندگان
چکیده
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 faced by these referees. Because the change was not effected in all leagues, the ‘experiment’ has both crosssectional and intertemporal dimensions. We study the effects of professional referees on a common measure of referee bias: length of injury time in close matches. We find that referees exercised a degree of favouritism prior to professionalism but not afterwards, having controlled for selection and soccer-wide effects. We also discuss the suitability of the variable that we, and others, use to measure favouritism, noting that alternative interpretations may be possible. JEL number: D8, J2, J44
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