OWN‐NATIONALITY BIAS: EVIDENCE FROM UEFA CHAMPIONS LEAGUE FOOTBALL REFEREES

We examine the existence and magnitude of own‐nationality bias. Using player‐match level data from 12 seasons of the UEFA Champions League (UCL) and referee assignment policies that pair players and referees from the same country, we determine the bias that referees exhibit toward players from their native country. Players officiated by a referee from the same country receive a 10% increase in beneficial foul calls. Referees' own‐nationality bias is more pronounced for national team players, players at home, and in later stages of the tournament. Elite referees exhibit as much, or more, own‐nationality bias as their less experienced counterparts. (JEL L83, J15)     

PERSUADED UNDER PRESSURE: EVIDENCE FROM THE NATIONAL FOOTBALL LEAGUE

We exploit a natural experiment within each National Football League game, finding the first evidence in professional sports that referees succumb to the pressures of satisfying team personnel in the vicinity of possible violations. Using generalized additive models for binomial outcomes, we show that these sideline‐based differences in penalty rates, which are observed on common but influential penalties including pass interference and holding, peak near the centralized location of players and coaches on the sideline. With sizable interests in referee decisions, coaches and players often try to manipulate referee behavior with verbal and nonverbal communications; such actions appear to be persuasive. (JEL ZO, H3)     

IDENTIFYING CHANGES IN THE SPATIAL DISTRIBUTION OF CRIME: EVIDENCE FROM A REFEREE EXPERIMENT IN THE NATIONAL FOOTBALL LEAGUE

Between the 2009–2010 and 2010–2011 seasons, the National Football League (NFL) repositioned one of its officials in order to prevent injuries among officials. This creates a quasi‐experiment for studying how a change in the extent of policing affects detection of offenses. Using play‐by‐play data from the 2009–2010 and 2010–2011 NFL season, I estimate how the detection of offensive holding changes when the positioning of an official changes. I find that there is approximately a 20 increase in the number of offensive holding penalties called after the NFL repositioned the official. Penalties called on defensive linemen fell as a result of the repositioning. Overall, there was no change in the total number of penalties called. Using the estimated change in the probability of a penalty, I estimate the probability of an official calling a penalty. I infer that NFL officials detect approximately 60% of crimes committed on the field. (JEL K4, Z0, D0)     

LIMITS OF THE EFFECT OF SOCIAL INFORMATION ON THE VOLUNTARY PROVISION OF PUBLIC GOODS: EVIDENCE FROM FIELD EXPERIMENTS

Previous work has demonstrated the effect of social information in the voluntary provision of public goods in the field. In this article, we demonstrate the boundary conditions of the effect. We show that when social information is too extreme, it ceases to influence individual contributions. The results highlight a natural limitation of the social information effect, and provide a characterization of the most effective levels for an organization to use. (JEL M31, H41, D64)     

COMPETITION AND BIDDING BEHAVIOR: SOME EVIDENCE FROM THE RICE MARKET

When objects have uncertain value, the net effect of competition in sealed-bid auctions is ambiguous. The risk of succumbing to the "winner's curse" generally causes bidders to exhibit a non-aggressive response in addition to the standard competitive effect. Sellers can influence the size of the nonaggressive effect by responding to the value uncertainty. This paper focuses specifically on individual bidding behavior in a rice auction market in which sellers issue a product-quality guarantee. The empirical evidence supports my hypothesis that such a guarantee negates the significance of the nonaggressive bidder response.     

COLLUSION, EFFICIENCY AND PRICING BEHAVIOR: EVIDENCE FROM THE BANKING INDUSTRY

This paper examines the validity of competing hypotheses used to explain the observed positive relationship between concentration and profits. Using price proxies from the banking industry, we find that leading (secondary) firms in a market act as price-setters (price-takers). This is true regardless of market concentration. We interpret this as evidence of the superior efficiency of leading firms and conclude that the higher profits earned by these firms is due to their superior efficiency and not collusive behavior.     

PEER PRESSURE: EXPERIMENTAL EVIDENCE FROM RESTROOM BEHAVIOR

We provide experimental evidence on the effect of peer pressure on individual behavior. Specifically, we study the effect of being exposed to an observer in a public restroom on handwashing and urinal flushing behavior. Our estimates show that being exposed to an observer increases the probability of handwashing by 13 percentage points and the probability of urinal flushing by 15 percentage points. Given that handwashing and urinal flushing have social benefits that exceed individual benefits, our findings provide support for peer pressure as an additional way of addressing the social suboptimality arising from externalities. (JEL C91, C93)     

PERFORMANCE,DIVERSITY AND NATIONAL IDENTITY EVIDENCE FROM ASSOCIATION FOOTBALL

The increasing national diversity of coworkers has no consensus on its impact on performance. Using a team's predominant nationality as a proxy for national diversity and national identity, there is robust evidence that it affects team and individual performance. Detailed worker-level data from a highly globalized industry, association football, show a nonlinear relationship between performance and the predominant nationality of a team's roster. As the number of members from the predominant nationality increases, performance declines. However, beyond a threshold level, performance rises. It follows that performance benefits from national diversity when the predominant nationality is small and from national identity when it is large. (JEL M14, Z21, Z22, J15)     

THE IMPACT OF LABOR CONTRACTS: EVIDENCE FROM BRAZIL

The conventional Keynesian model suggests that frictions created by nominal wage contracts generate a positive relationship between inflation and output. On the other hand, the New Classical/Real Business Cycle theory claims that firms and workers base their employment behavior, and hence output, on the marginal product of labor ignoring the efficiencies of fixed nominal wage contracts. Using Brazilian data, where nominal wages were indexed by law, tests show that fixed nominal wage contracts insignificantly affected output. Thus, the data support the view that fixed nominal wages play an insignificant role in determining the evolution of output. ( JEL E31)     

A COMMENT ON COMPETITION AND BIDDING BEHAVIOR: SOME EVIDENCE FROM THE RICE MARKET

In testing agents' responses to increased competition in sealed-bid first price-rice auctions, Meyer [1988] makes two erroneous assumptions: (1) that agents know ex ante the number of bidders in the auction, and (2) that firms forecast resale prices with information unavailable at the time of the auction. These two misspecifications are identified and corrected. A probit model provides a forecast of market competition, and agents' bids are modeled as a function of expected competition and factors affecting the value of each rice lot. The bias toward zero in Meyer's estimated coefficient on market competition is reduced.     

THE LAW OF ONE PRICE REVISITED: NEW EVIDENCE ON THE BEHAVIOR OF INTERNATIONAL PRICES

This paper is an empirical investigation of the long-run behavior of international prices at the microeconomic level. It analyzes the time-series behavior of a unique set of carefully matched, disaggregated export prices for manufactured goods from the U.S., Gemany, and Japan over the period 1974–90. The results provide little evidence of a long-run linear relationship between global prices of similar export goods from different sources, casting doubts on the empirical relevance of the law of one price.     

FORECASTING WITH SOCIAL MEDIA: EVIDENCE FROM TWEETS ON SOCCER MATCHES

Social media is now used as a forecasting tool by a variety of firms and agencies. But how useful are such data in forecasting outcomes? Can social media add any information to that produced by a prediction/betting market? We source 13.8 million posts from Twitter, and combine them with contemporaneous Betfair betting prices, to forecast the outcomes of English Premier League soccer matches as they unfold. Using a microblogging dictionary to analyze the content of Tweets, we find that the aggregate tone of Tweets contains significant information not in betting prices, particularly in the immediate aftermath of goals and red cards. (JEL G14, G17)     

DO POSITIONAL CONCERNS DESTROY SOCIAL CAPITAL: EVIDENCE FROM 26 COUNTRIES

Research on the effects of positional concerns on individuals' attitudes and behavior is sorely lacking. To address this deficiency, we use the International Social Survey Programme 1998 data on 25,000 individuals from 26 countries to investigate the impact of relative income position on three facets of social capital: horizontal and vertical trust as well as norm compliance. Testing relative deprivation theory, we identify a deleterious positional income effect for persons below the reference income, particularly for their social trust and confidence in secular institutions. Also often a social capital‐lowering effect of relative income advantage occurs, while a rise in absolute income almost always contributes positively. These results indicate that a rise in income inequality in a society too large is rather detrimental to the formation of social capital. (JEL Z130, I300, D310)     

SOCIAL INFLUENCE, SELF-REFERENT IDENTITY LABELS, AND BEHAVIOR

Self-referent identity labels are frequently argued to be a central component of the self and to be important in the planning of conduct. Despite the attractiveness of this argument, relatively little research has yet appeared that supports it, and studies of the etiology and effects of self-referent labels often fail to control for the confounding effects of preferences, norms. or other conceptions that are known to affect conduct. In this paper, propositions are argued concerning the causes and independent effects of self-referent labels. Some of these propositions are then tested in two studies, one concerned with alcohol use among adolescents in four Western countries, the other focused on alcohol and tobacco use among American high-school and undergraduate students. Both studies found strong ties between reports of peer modeling and respondents self-referent labels and that the latter had significant and independent effects on reported behaviors. Theoretical and practical implications of findings are discussed.     

THE EFFECTS OF EDUCATION ON FERTILITY: EVIDENCE FROM TAIWAN

This study investigates the impact of women's education on fertility. For identification, we use the 1968 compulsory education law change in Taiwan, which generated a regression discontinuity design (RDD) setting. We use the whole population of women from the 1980 and 2010 Population Censuses. Results of our RDD estimation using the exact date of birth suggest that the law change was effective in boosting women's education, but it did not have any impact on fertility. This is in stark contrast to most previous studies using only the birth year as the running variable or using it to construct instruments, which find that women's education depresses fertility. This study demonstrates that using a discrete running variable in RDD may generate a false discontinuity for an otherwise continuous regression function. (JEL J13, C21, I2)     

TRACING THE DYNAMICS OF COMPETITION: EVIDENCE FROM COMPANY PROFITS

This article proposes a simple approach to analyzing profit dynamics, which allows for time-varying persistence of profits. The time series model is a simple autoregressive process where the dynamics of the persistence parameter follow an autoregressive process. Using the longest time series available on profits for more than a hundred U.S. firms, we find that there is ample evidence of time variation in the persistence parameter. ( JEL L00, C22)     

THE NATURE OF OUTSOURCING RELATIONSHIPS: EVIDENCE FROM OAP PRICES

This paper studies the extent and variation in production cost pass‐through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass‐through of production and trade costs to import prices. Notably, pass‐through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital‐intense industries. The reasons for these cross‐country and cross‐industry differences, as they relate to theories of outsourcing and trade, are explored. (JEL F1, F2)     

PRICING ANOMALIES IN THE MARKET FOR DIAMONDS: EVIDENCE OF CONFORMIST BEHAVIOR

Some goods are consumed not just for their intrinsic utility but also for the impression their consumption has on others. We analyze the market for such a commodity—diamonds. We collect data on price and other attributes from the inventories of three large online retailers of diamonds. We find that people are willing to pay premiums upward of 18% for a diamond that is one‐half carat rather than slightly less than a half carat and between 5% and 10% for a one‐carat rather than a slightly less than one‐carat stone. Since a major portion of larger gem‐quality diamonds are used for engagement rings, such an outcome is consistent with Bernheim's model of conformism, where individuals try to conform to a single standard of behavior that is often established at a focal point. In this case, prospective grooms signal their desirability as a mate by the size of the diamond engagement ring they give their fiancées. (JEL A1, D4)     

THE HEALTH EFFECTS OF MILITARY SERVICE: EVIDENCE FROM THE VIETNAM DRAFT

There is a strong cross-sectional association between military service and adverse health. However, veterans differ very significantly in their observable characteristics from nonveterans, suggesting that some of the association between military service and adverse health may be due to omitted variables bias. To address this problem, we use draft eligibility as an instrument for military service. Despite a very strong first-stage relationship between draft eligibility and military service, the two-stage least squares estimates of the difference in health between veterans and nonveterans are statistically insignificant and too imprecise to preclude the differences in health found in the cross-sectional regressions. ( JEL H56, I12, I18)     

INCIDENCE AND CONSEQUENCES OF RISK‐TAKING BEHAVIOR IN TOURNAMENTS—EVIDENCE FROM THE NBA

We empirically explore the relevance and efficiency of risk‐taking behavior in tournaments. We use data from the National Basketball Association (NBA) and measure risk‐taking by the fraction of three‐point shots in basketball games. We examine how point differences between teams during games affect their subsequent risk‐taking behavior. It is found that teams that are trailing are more likely to increase their use of three‐point shots. We additionally analyze the consequences of this change in behavior. Enhanced risk‐taking is inefficient in the vast majority of cases and is only beneficial if a team is trailing by a rather large margin. We discuss possible explanations for these decision errors. (JEL M5, D81, J30)