Favoritism towards high-status clubs: Evidence from German soccer
- UniversityErasmus University Rotterdam
- Start date
Friday, 11 Oct 2019, 15:00
- End date
Friday, 11 Oct 2019, 16:00
- Theil Building
- Spoken Language
Status may influence others' judgements for two reasons: On the one hand, status may serve as a proxy for unobservable heterogeneity and may then increase the accuracy of judgements (statistical discrimination).
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.