Does the Red Flag Rule Induce Risk Taking in Sprint Finishes? Moral Hazard Crashes in Cycling’s Grand Tours

Travis Lybbert, Troy C. Lybbert, Aaron Smith and Scott Warren

Journal of Sports Economics, 2012, vol. 13, issue 6, 603-618

Abstract: Sprint finishes in professional cycling are fast, furious, and dangerous. A “red flag rule†(RFR) seeks to moderate the chaos of these finishes, but may induce moral hazard by removing the time penalty associated with crashing. To test for moral hazard, the authors use a 2005 rule change that moved the red flag from 1 km to 3 km from the finish. Data from Europe’s Grand Tours indicate that, after the rule change, both the incidence and the size of crashes nearly doubled in the 1–3 km from the finish zone. There was no such increase in crashing rates in the 3–5 km zone.

Keywords: moral hazard; cycling; risk; Tour de France (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:13:y:2012:i:6:p:603-618

DOI: 10.1177/1527002511412077

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