Competitive Balance in a Professional Sports League: A Simulation Exercise

Room 1.02 – Malet Place Engineering Building,
London WC1E 6BT

Tuesday 24th October 2006 at 6pm

Given by:

Professor Stefan Szymanski

The Tanaka Business School, Imperial College London

Synopsis:

The operation of economic competition between clubs in a sports league has been hotly debated by academics and policy makers in recent years. Conventional wisdom has it that economic inequalities will lead to a sporting competition that is so unbalanced that the league as a whole will suffer. On this basis redistributive policies are advocated in order to make competition more balanced and therefore more attractive. Using the standard economic model of a contest it is possible to construct a simulation exercise in which participants can play the role of club managers/owners, deciding how much to spend on purchasing talent in a non-cooperative environment. The simulation exercise can be played over several rounds. This exercise illustrates the concept of a Nash equilibrium highlights some interesting properties of the competitive equilibrium that do not accord with the conventional wisdom.

Readings:

A summary of Professor Szymanski’s most recent publications on sports economics

For further details contact:

Sean Hamil
Department of Management
Birkbeck College
Malet Street
London WC1E 7HX

Email: s.hamil@bbk.ac.uk or Tel: 020-7631 6763

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