Frick, B and Simmons, R (2007) The allocation of rewards in athletic contests. Working Paper. The Department of Economics, Lancaster University.
Abstract
Similar to most top-tier matches in professional basketball, baseball and soccer, high-level competitions in individualistic sports, such as the tennis tournaments of Wimble-don and Flushing Meadows, the golf tournaments of Augusta and St. Andrews, as well as the marathons of New York and London attract not only thousands of spectators, but also a TV audience of millions of fans. Moreover, these (and other) individualistic sports have recently received increased attention also from economists trying to test a number of hypotheses that can be derived from "tournament theory" or - as a synonym - from "contest theory". The chapter is structured as follows: We first provide a brief description of the development of prize money levels and structures in the three different individual sports men-tioned in the previous paragraph (and, consequently, athletes’ incomes over the last years (section 2). We then summarize the basic insights and the core predictions of tour-nament/contest theory (section 3) and review the available literature on the incentive effects of tournament pay systems in athletic contests (section 4). Finally, section 5 concludes and raises some of the questions that have not been answered yet and that should, therefore, be dealt with in future research.