LOG904-174 Decision Making and Incentives in Competitive Environments (Autumn 2022)

About the course

Frederick Winslow Taylor was one of the first management consultants. His fantasy was to observe and measure every aspect of worker’s performance to improve industrial efficiency. Sports industry is a marvellous laboratory for testing and applying economic, managerial, and psychological theories. This is because contestants in professional sports compete in real competitive settings that involve high-stake decisions that are familiar to agents. As such, it provides a unique opportunity to observe and measure performance in situations that involve features such as pressure, incentives, heterogeneity in abilities, etc.

Thus, sports competitions can serve as excellent natural experiments. The importance of sports competitions cannot be better expressed than the following quote from a Nobel Prize Laureate Daniel Kahneman does: “Studying sport is a great idea, because people make many decisions that matter enormously to them under standard conditions. It is actually one of the best places to do this” (Bar-Eli at al., 2020). In the same spirit, another Nobel Prize Laureate, Gary S. Becker, referred to soccer as an important setting that allows testing of economic behavior, such as efficient markets and social influences on behavior (Palacios-Huerta, 2014). Finally, another Nobel Prize Laureate, Richard Thaler (together with his co-author), used data from the NFL to show that decision making of managers during draft in the NFL is not consistent with rational expectations and efficient markets, but rather consistent with psychological research (Massey and Thaler, 2013).

This course presents evidence from sports data that provides us with insights into various aspects of human behaviour, including – among others – preferences for competition, behaviour in competitive environments in general and various kinds of tournaments in particular, psychological aspects affecting performance, or strategic decision making by individuals or by teams.

The course is connected to the following study programs

• Master of Science in Logistics
• Experience-based Master in Logistics
• Master of Science in Sustainable Energy Logistics
• Exchange programme - Master's level
• Master of Science in Sustainable Transport and Urban Mobility

Recommended requirements

Statistics.

The student's learning outcomes after completing the course

Knowledge:

Learning and testing economic, managerial, and psychological theories by using data from real competitive situations that appear in professional sports.

Skills:

Students will be prepared to different situations that may appear in competitive environment by applying knowledge from this course. The students will also be able to apply game-theoretical to decide on the optimal level of efforts in competitive situations.

General competence:

Students will be exposed to different models that will allow them to deal with real situations in labor market such as discouragement of workers, how to increase productivity by applying psychological techniques, how to deal with pressure, etc.

Forms of teaching and learning

Teaching consists of lectures and group work.

Examination

 

• Form of assessment 1: Written exam

• Proportion: 85 %

• Duration: 90 minutes

• Grouping: Individually

• Grading scale: Letter (A - F)

• Support material: Calculator and vocabulary.

 

• Form of assessment 2: Presentation of a paper

In the beginning of the course the students will create teams of 2-3 persons. Every team will have to present one academic paper that will be provided by the lecturer. The students will have to present the main motivation of the paper, data and environment used and the main results without going into mathematical issues that might appear in the papers.

• Proportion: 15%

• Duration: 20 minutes

• Grouping: Group

• Grading scale: Letter (A - F)

• Support material: None

Syllabus

Bar-Eli, M., Krumer, A. and Morgulev, E., 2020. Ask not what economics can do for sports-Ask what sports can do for economics. Journal of Behavioral and Experimental Economics, 89, p.101597.

Massey, C. and Thaler, R.H., 2013. The loser's curse: Decision making and market efficiency in the National Football League draft. Management Science, 59(7), pp.1479-1495.

Palacios-Huerta, I., 2014. Beautiful game theory. In Beautiful Game Theory. Princeton University Press.