Tournament Performance and ‘Agency’ Problems: An Empirical Investigation of ‘March Madness’

James McClure and Lee Spector

No 199601, Working Papers from Ball State University, Department of Economics

Abstract: Tournaments have long been used as a resource allocation device. Regardless of the margin of victory, a tournament's champion is typically rewarded far more handsomely than are its losers. For this reason, a tournament can generally be expected to elicit spectacular levels of performance from a group of competitors; performances in professional golf tournaments are an example. Surprisingly, the analysis in this paper indicates the existence of no significant relationship between the rewards and performances of participants in the NCAA basketball tournament. To explain this finding we allude to the classic principal-agent problem.

Keywords: NCAA Basketball Tournament; Principal-Agent Problem; Incentive Effects (search for similar items in EconPapers)
Pages: 14 pages
Date: 1996-01, Revised 1997-01
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Citations: View citations in EconPapers (3)

Published in Journal of Economics and Finance 21 no. 1 (1997): 61-68.

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http://econfac.bsu.edu/research/workingpapers/bsuecwp199601mcclure.pdf First version, 1996 (application/pdf)

Related works:
Journal Article: Tournament performance and “Agency” problems: An empirical investigation of “March madness” (1997)
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