Favoritism towards high-status clubs: Evidence from German soccer

On the other hand, status may lead to biased perceptions and decisions. Disentangling these potential impacts of status requires a reliable measure for the accuracy of judgments. We use data from professional sports that categorizes referee decisions as “correct”, “wrong”, or “debatable”. Status is proxied by long-term performance and club members. We find strong evidence for favoritism for high-status clubs. By contrast, the actual strength of a club proxied by betting odds has no impact.

In addition to the status bias, we find that the quality of decisions suffers from type-I-error aversion. Investigating potential mechanisms underlying the bias yields two main insights: Career concerns are fully in line with a type-I-error aversion but cannot explain the status bias itself. Second, we find that referees tend to favor clubs that were most successful during their own childhood and adolescence.