Nomination Contests:Theory and Empirical Evidence from Professional Soccer

In many situations, applicants compete for a limited number of positions, and selection is based on perceived skill or talent, for example in hiring and promotion procedures or in nominations of election candidates by political parties. Our paper provides a theory of agents’ effort incentives in such situations and tests the predictions of this theory versus alternative theories by means of a quasi-experiment in professional soccer. Our theory introduces signal jamming as in career concerns models in rank-order tournaments, allowing for asymmetries between agents. We show that incentives are strongest in close contests, i.e., when several agents have similar ex ante winning probabilities. Moreover, the accuracy of the nomination committee’s information about a candidate’s ability at the beginning of the selection process may also affect her incentives. As we show, the predicted relation between a candidate’s optimal effort and the precision of the information the decision-maker has about her is non-monotonic. We test these predictions using a panel data set on the German Soccer League in the seasons 2006/07 and 2007/08. A subset of players belong to nations that qualified for the Euro Cup in summer 2008, the most prestigious international soccer Cup alongside the World Cup, and thus participated in the nomination contest. We find a large positive effect of nomination contest participation on several output measures, for example the number of shots on the goal, for players with intermediate chances of being nominated. For players whose nominations chances are very high, however, the effect of contest participation is negative. That means that players whose uncertainty over their (non-)nomination is highest will exert the most effort in order to positively influence the decision of being nominated. Players who are certain of (not) being nominated do not have any incentive to exert extra effort since it will have no impact on the decision. Much rather do these players reduce effort in club games in order to avoid injuries that may jeopardize their Euro Cup participation. Finally, by showing that younger players react more strongly to their countries’ Euro Cup qualifications, we provide evidence consistent with career concerns. That is, participating in a Euro Cup has much higher relevance to the career prospects of a younger player than to those of a players who is at the very end of his career.

Miklós-Thal, Jeanine and Hannes Ullrich (2009), Nomination Contests:Theory and Empirical Evidence from Professional Soccer, ZEW Discussion Paper No. 09-027, Mannheim.