INTERRACIAL WORKPLACE COOPERATION: EVIDENCE FROM THE NBA

Using data from the National Basketball Association (NBA), we examine whether patterns of workplace cooperation occur disproportionately among workers of the same race. We find that, holding constant the composition of teammates on the floor, basketball players are no more likely to complete an assist to a player of the same race than a player of a different race. Our confidence interval allows us to reject even small amounts of same‐race bias in passing patterns. We find some evidence of own‐race bias in situations where the outcome of a particular play is less important. Our findings suggest that high levels of interracial cooperation can occur in a setting where workers are operating in a highly visible setting with strong incentives to behave efficiently. (JEL J15, J71, L23)     

CRIME AND PUNISHMENT IN MAJOR LEAGUE BASEBALL: THE CASE OF THE DESIGNATED HITTER AND HIT BATTERS

Past studies have found a positive correlation between the use of the designated hitter in baseball and hit batters, but the reason for this is debatable. Using a new micro‐level data set of individual plate appearances, we control for detailed cost‐benefit attributes that affect the decision calculus of the pitcher to isolate the deterrent impact of requiring the pitcher to bat. We find that pitchers hit batters strategically, and the deterrent effect of requiring pitchers to bat explains 60%–80% of the difference in hit batsmen between leagues. We also identify evidence of direct retaliation against plunking pitchers. (JEL D81, KC42, L83)     

REPUTATION EFFECTS IN THE MARKET OF CERTIFIERS: EVIDENCE FROM THE AUDIT INDUSTRY

Certifiers verify unobserved product characteristics for buyers and thereby alleviate informational asymmetries and facilitate trade. When sellers pay for the certification, however, certifiers can be tempted to bias their opinion to favor sellers. Indeed, accounting scandals and inflated credit ratings suggest sellers may prefer to select dishonest certifiers. I test this proposition by estimating the effect of adverse quality signals on audit demand. Exploiting the natural experiment of Arthur Andersen's demise, I find that auditors with worse quality signals experience a fall in demand. This suggests that reputation effects are at work even in the presence of conflicts of interest. (JEL L15, L8, M4)     

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)     

TALENT AND/OR POPULARITY: WHAT DOES IT TAKE TO BE A SUPERSTAR?

We show that both talent and popularity significantly contribute to stars' market values in German soccer. The talent‐versus‐popularity controversy on the sources of stardom goes back to Rosen (1981) and Adler (1985) . All attempts to resolve the controversy empirically face the difficulty of accurately identifying talent. In professional sports, rank‐order tournaments help in ascertaining talent. Analyzing a team setting, we use 20 different performance indicators to estimate a player's talent according to his ability to increase the team's winning probability. (JEL J31, J44, L83)     

SENTIMENT BIAS AND ASSET PRICES: EVIDENCE FROM SPORTS BETTING MARKETS AND SOCIAL MEDIA

Previous research using attendance‐based proxies for sentiment bias in sports betting markets confirmed the presence of investor sentiment in these markets. We use data from social media (Facebook “Likes”) to proxy for sentiment bias and analyze variation in bookmakers' prices investor sentiment. Based on betting data from seven professional sports leagues in Europe and North America, we find evidence that bookmakers increase prices for bets on teams with relatively more Facebook “Likes,” indicating the presence of price‐insensitive investors with sentiment bias. These price changes do not affect informational efficiency in this market. (JEL L81, G14)     

RELEASING THE TRAP: A METHOD TO REDUCE INATTENTION BIAS IN SURVEY DATA WITH APPLICATION TO U.S. BEER TAXES

This study uses discrete choice experiments to explore the efficacy of prompts targeted at reducing inattention bias. Upon receiving feedback, inattentive respondents are given the opportunity to reanswer a so‐called “trap question” that checks for attentiveness. We find that individuals who miss trap questions and do not correctly revise their responses have significantly different choice patterns as compared to individuals who correctly answer the trap question. Adjusting for these inattentive responses has a substantive impact on policy impacts. Results, based on attentive participant responses, indicate that a minimum beer price would have to be substantial to substantially reduce beer demand. (JEL C83, Q18, Q51)     

THE IMPACT OF MANAGERIAL CHANGE ON PERFORMANCE: THE ROLE OF TEAM HETEROGENEITY

When a key responsibility of a manager is to allocate more or less attractive tasks, subordinates have an incentive to work hard and demonstrate their talents. As a new manager is less well informed, management dismissals reinvigorate this tournament competition—but only in sufficiently homogeneous teams. We investigate this hypothesis using a large dataset on dismissals of soccer coaches, whose main task is indeed the selection of players. We find that dismissals enhance performance (only) in homogeneous teams. Moreover, we show that there is typically a negative selection bias when evaluating succession effects, which reconciles previous contradictory findings. (JEL D22, J44, J63)     

GENDER AND THE CONSULTING ACADEMIC ECONOMIST

We surveyed academic economists on their experiences and perceptions of legal consulting. Nearly two-thirds have consulting experience and 40% have consulted within the last 5 years. Base hourly rates average $244, with a median of $200. Women are less likely than men to have served as consultants and charge lower rates than comparable men, but there are few differences by gender in willingness to consult. Women report substantially more negative bias and are less likely to consult in complex cases or to have a high profile role in litigation. (JEL J44, J71, K41)     

TRADE,GEOGRAPHY AND THE SKILL PREMIUM IN U.S. MANUFACTURING

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period. (JEL F12, F16, L60)     

ZONING UNDER SPATIAL PRICE DISCRIMINATION

This paper investigates zoning in a duopoly model of spatial price discrimination. We find that the zone in which the firms are not allowed to locate depends on the bias of the regulator. A bias toward firms is deduced when locations around the central area are forbidden, and a bias toward consumers exists when firms are only allowed to locate at places around the central area. The design of the zoned area guarantees that firms locate optimally and works under simultaneous or sequential choice of locations by the two firms. (JEL L13, R38)     

SEQUENTIAL JUDGMENT EFFECTS IN THE WORKPLACE: EVIDENCE FROM THE NATIONAL BASKETBALL ASSOCIATION

This study investigates the impact of past performance evaluations on future decisions involving judgment. I analyze the decisions of highly skilled and highly monitored referees regarding offensive fouls and violations in the National Basketball Association. After testing for equilibrium adjustments in player behavior, findings support a hypothesis of increased referee scrutiny on one team following a potentially questionable call on the opposing team. Results are inconclusive for subsequent changes in scrutiny toward the original violating team. The analysis provides a nonexperimental test of sequential bias on elite employees working under strict performance standards, and suggests a likely role for sequential judgment effects in other areas of economic activity. (JEL D03, L83, J44, M59)     

BIASED INFORMATION AND EFFORT

We study the impact of information manipulation by a principal on the agent's effort. In a context of asymmetric information at the principal's advantage, we test experimentally the principal's willingness to bias (overestimate or underestimate) the information she/he gives to her/his agent on her/his ability in order to motivate her/him to exert more effort. We find that (1) principals do bias information, and (2) agents trust the cheap‐talk messages they receive and adjust their effort accordingly. Therefore, biased messages improve both the agent's performance and thus the principal's profit. This, however, does not increase efficiency. We also find that overestimation occurs much more often than underestimation. Making the signal costly in an additional treatment reduces this effect. (JEL D83, C92, M12)     

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)     

Common Coding of Observation and Execution of Action in 9‐Month‐Old Infants

Do 9‐month‐old infants motorically simulate actions they perceive others perform? Two experiments tested whether action observation, like overt reaching, is sufficient to elicit the Piagetian A‐not‐B error. Infants recovered a toy hidden at location A or observed an experimenter recover the toy. After the toy was hidden at location B, infants in both conditions perseverated in reaching to A, demonstrating that active search by the infant is not necessary for the A‐not‐B error. Consistent with prior research, infants displayed an ipsilateral bias when reaching, the so‐called mysterious midline barrier. A similar ipsilateral bias was also observed depending on the manner in which the experimenter reached; infants perseverated following observation of ipsi‐ but not contralateral reaches by the experimenter. Thus, infants perseverated only following observation of actions they themselves were able to perform, suggesting that they coded others' actions in terms of motor simulation.     

AN ESTIMATE OF THE AGE DISTRIBUTION'S EFFECT ON CARBON DIOXIDE EMISSIONS

We estimate the age distribution's impact on carbon dioxide emissions from 1990 to 2006 by exploiting demographic variation in a panel of 46 countries. To eliminate potential bias from endogeneity or omitted variables, we instrument for the age distribution in a country's current population with lagged birth rates, and the regressions control for total population, total output, and country and year fixed effects. Carbon dioxide emissions increase with the share of the population aged 35 to 49 years, and this result is statistically significant and quantitatively large. (JEL Q4, J1)     

IDENTIFYING THE EFFECT OF OPEN ACCESS ON CITATIONS USING A PANEL OF SCIENCE JOURNALS

An open‐access journal allows free online access to its articles, obtaining revenue from fees charged to submitting authors or from institutional support. Using panel data on science journals, we are able to circumvent problems plaguing previous studies of the impact of open access on citations. In contrast to the huge effects found in these previous studies, we find a more modest effect: moving from paid to open access increases cites by 8% on average in our sample. The benefit is concentrated among top‐ranked journals. In fact, open access causes a statistically significant reduction in cites to the bottom‐ranked journals in our sample, leading us to conjecture that open access may intensify competition among articles for readers' attention, generating losers as well as winners. (JEL L17, O33)     

Structure and bias in the network autocorrelation model

In a recent paper (Mizruchi and Neuman, 2008), we showed that estimates of ρ in the network autocorrelation model exhibited a systematic negative bias and that the magnitude of this bias increased monotonically with increases in network density. We showed that this bias held regardless of the size of the network, the number of exogenous variables in the model, and whether the matrix W was normalized or in raw form. The networks in our simulations were random, however, which raises the question of the extent to which the negative bias holds in various structured networks. In this paper, we reproduce the simulations from our earlier paper on a series of networks drawn to represent well-known structures, including star, caveman, and small-world structures. Results from these simulations indicate that the pattern of negative bias in ρ continues to hold in all of these structures and that the negative bias continues to increase at increasing levels of density. Interestingly, the negative bias in ρ is especially pronounced at extremely low-density levels in the star network. We conclude by discussing the implications of these findings.     

MARCH MADNESS? UNDERREACTION TO HOT AND COLD HANDS IN NCAA BASKETBALL

The hot hand bias is the widely documented bias toward overestimation of positive serial correlation in sequential events. We test for the hot hand bias in a novel real‐world context, the seeding of National Collegiate Athletic Association (NCAA) basketball tournament teams. That is, we examine whether teams that perform relatively well heading into “March Madness” are seeded too high, and/or teams with poor recent performance are seeded too low. The seeds are determined by a 10‐member committee that only has implicit incentives, but these incentives are still substantial as the committee's decisions are highly scrutinized by the media, fans, and other stakeholders. We find that, contra the hot hand bias, the committee underreacts to signals of momentum heading into the NCAA tournament. Various results indicate this behavior can be attributed to both: (1) inattention to relatively detailed information indicating momentum; and (2) under‐appreciation of the predictive value of this information. Betting markets incorporate this information efficiently, but neglect some additional information that is predictive of winning NCAA tournament games but not of beating the spread. We note that the NCAA tournament has been highly popular and lucrative partly due to the “madness” (high frequency of wins by lower‐seeded teams), which the bias we document contributes to, making the persistence of bias less surprising. (JEL D83, L83)     

SWITCHING REGRESSION ESTIMATES OF THE INTERGENERATIONAL PERSISTENCE OF CONSUMPTION

The influential economic theory of intergenerational transfers predicts a negative connection between credit constraints and intergenerational mobility of consumption. Existing work has used bequest receipt to signal a parent's access to credit markets when investing in his children's human capital. However, measurement error in bequest receipt generates misclassification error and, in turn, attenuation bias. Employing switching regressions with imperfect sample separation to deal with this error, we show that the intergenerational persistence of consumption in the United States for credit constrained families is much higher than that for unconstrained families, contrary to what the theory implies. This means that children from constrained families are more likely to have consumption levels similar to those of their parents than children from unconstrained families. Our results are robust to the choice of bequest variables and other predictive variables in the switching equation. (JEL C13, D12, E21, J62)