Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions League Qualifying Rules

30 Pages Posted: 6 Apr 2015

See all articles by Colin P. Green

Colin P. Green

Department of Economics

Fernando A. Lozano

Pomona College; IZA Institute of Labor Economics

Rob W. Simmons

Lancaster University

Abstract

We analyse how a change in the probability of winning a tournament affects an agent's effort using the qualification rules for entry into the group and playoff stages of the UEFA Champions' League. Our results suggest that increasing the number of slots that a national league gets in the Champions' League leads to increases in investment in talent ex ante. This effect is largest among the teams that in the previous season just failed to qualify. This suggests that changes in prize structure leads to changes in investment decisions amongst those clubs most affected at the margin. However, we also find that incumbent teams that have already qualified for the Champions' League simultaneously raise their efforts, consistent with the occurrence of an arms race among top European football teams.

Keywords: tournaments, UEFA Champions League

JEL Classification: M5

Suggested Citation

Green, Colin P. and Lozano, Fernando A. and Simmons, Rob W., Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions League Qualifying Rules. IZA Discussion Paper No. 8950, Available at SSRN: https://ssrn.com/abstract=2589812

Colin P. Green (Contact Author)

Department of Economics ( email )

Høgskoleringen
Trondheim NO-7491, 7491
Norway

Fernando A. Lozano

Pomona College ( email )

Claremont, CA 91711
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Rob W. Simmons

Lancaster University ( email )

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