The Economics of Crime Reconsidered: A Game Theoretic Approach with an Empirical Test from Major League Baseball
Joseph P. McGarrity
This article uses data on hit batsmen from Major League Baseball to illustrate a mixed-strategy, game theoretic approach to the decisions of the pitcher and the batter. The pitcher would like to throw to a batter who stands in the middle of the batter's box. The game theoretic model predicts that the pitcher will throw at fewer batters as velocity increases, while the standard crime model would assume that the pitcher's throw-ats would remain unchanged and the batter would respond by leaning in less often. The Total Effect curves suggest that there will be more throw-ats in the American League for any level of velocity. The number of purposeful inside pitches will decrease at an increasing rate as velocity increases. The game theoretic model predicts that a pitcher who can throw with greater velocity will have to waste fewer inside pitches to keep a batter from leaning into a pitch.
Lawrence M. Kahn
This article uses basketball as the laboratory to look at discrimination in pay, hiring, and retention against black National Basketball Association (NBA) players and coaches, and gender discrimination among college coaches. It describes Gary Becker's analysis of the possible sources of discrimination in labor markets. It then outlines the evidence on each of the possible forms of discrimination in basketball, including both a discussion of methodological issues and substantive findings. Racial discrimination in professional basketball seemed more prevalent in the 1980s than is the case today. The issue of whether a gender difference in revenue produced is a legitimate factor upon which to base a gender difference in coaching salaries is an open question from the legal point of view. The evidence for customer discrimination in the NBA in the 1990s and 2000s seems weaker than it was during the 1980s.
This article replicates for hockey what others have done for baseball and basketball, with the interesting exception that alleged discrimination in hockey falls along the lines of language and national origin rather than along racial grounds. The National Hockey League (NHL) essentially has three minority groups: Americans, Europeans, and French Canadians. The focus in the discrimination literature has been on French Canadians, and, to a lesser extent, Europeans. It is reasonable to suggest that Canadian fans and media have a much stronger sense of “ownership” of the game of hockey than what is found in the United States. There have also been economic changes that have occurred in recent years that should work to decrease any possible discrimination. While the NHL has historically had the least amount of voluntary player mobility, the most recent collective bargaining agreement signed in 2005 provides for a much more liberalized system of free agency.
Robert J. Barro, Rachel M. McCleary, and Alexander McQuoid
Saint making has been a major activity of the Roman Catholic Church for centuries. The pace of sanctifications has picked up noticeably in the past several decades under the most recent two popes, John Paul II and Benedict XVI. This article explores the economics of sainthood, applying social science reasoning to understand the Church's choices on numbers and characteristics of saints, gauged by the location and socioeconomic attributes of the persons designated as blessed. It analyzes long-term data on canonization (approval as a saint) and beatification (final stage of qualification for canonization) by the Catholic Church since 1588, when official Vatican records began.
Mark W. Nichols and Mehmet Serkan Tosun
This chapter examines the price, cross, and income elasticity of demand for casino gambling. The focus is specifically on casino gambling, as opposed to other forms of gambling, such as lottery or pari-mutuel wagering. Nevertheless, in the case of price elasticity comparisons with other forms of gambling are made to provide a context for the reader. Similarly, in the case of income elasticity comparisons are made between casino revenue versus income and sales tax revenue. Very few empirical studies have calculated elasticity estimates for casino gambling. One notable reason for this is the unavailability of accurate data on the quantity and price of casino gambling. Reasons for this and existing studies are reviewed here and recommendations are made for future research.
David McDonald, Ming-Chien Sung, and Johnnie Johnson
Betting markets constitute naturalistic decision-making environments, which offer great potential for helping to understand individuals’ decision-making behavior. These markets feature many of the aspects of real-world decision environments. In particular, they are associated with rich, dynamic information sets, offer strong incentives to participants for success, require the commitment of the individual’s own resources, and involve repeated trials offering significant potential for learning. This chapter provides a survey of previous studies that have employed betting markets of various kinds to investigate decisions made by bettors, with particular reference to systematic biases that were first identified in the laboratory.
J. James Reade and John Goddard
The betting industry has been transformed by the Internet. Growth of person-to-person betting, mediated through online betting exchanges, has been a key element of this transformation. Betting exchanges enable traders to either back (buy) or lay (sell) bets on a wide range of sporting events. Such continuously operating online betting markets have ensured the transition of the use of high-frequency data (sub-daily sampling) from the financial setting into the betting market context. This chapter reviews recent academic research on the topic of information efficiency in high-frequency, in-play football betting markets. Several studies have reported evidence violating weak-form information efficiency, in the form of a favorite-longshot bias in in-play betting prices. However, there is evidence in the literature in favor of semi-strong form information efficiency. One study reports interesting evidence in support of strong-form information efficiency. As in-play betting markets continue to develop, driven by further improvements in computing power, parallel growth is anticipated in research on information transfer and price formation in financial markets, an exciting new arena for academic study.
For the past century, tote operators and horseracing bettors have enjoyed a mutually satisfying relationship. However, the past decade or so has seen periods of decline in tote (totalizator) betting, which many attribute to the (supposed) increasing population of well-informed and (hypothetically, in the extreme) so-called sophisticated players who are believed to be extracting disproportionate amounts from the pools such that other more “casual” players count their meager returns and stop playing. This chapter examines whether this hypothesis is valid, by considering the extreme case of many sophisticated players in the market. It also argues that, whatever factors could be contributing to periodic declines in tote betting, the damage to the markets if there existed a proliferation of expert bettors is minimal and could not (as is feared by many tote operators, governments, and players), by itself, be enough to seriously or irreparably damage pari-mutuel markets.
Stephen J. K. Walters
This article explores the organized baseball's racial record as far back as the 1880s, when segregation took root in baseball, through Branch Rickey's hiring of Jackie Robinson in 1947, up to the present day. It describes how baseball became segregated and segregation's feedback effects on black players' labor supply decisions. It presents data on black-white earning differences prior to reintegration of the sport. It addresses why reintegration took so long and how it ultimately occurred. Robinson's breakthrough and its immediate aftermath, and the empirical literature on the post-integration period are evaluated. The existence of an active market for baseball memorabilia has enabled researchers to test for fan bias in the form of a willingness to pay more for products featuring white (black) players, ceteris paribus. Baseball has taught a great deal about how complicated and persistent are racial bias' effects, and about the short- and long-term economic consequences of discrimination.
Daniel M. Hungerman
In the early 1990s, little work was being produced on the economics of religion; today, dozens of papers are being written (and published) on the topic, including articles in the top journals on economics and sociology. This body of work has produced a number of useful findings. Starting with the seminal contribution by Laurence Iannaccone (1992), research has shown that seemingly bizarre religious practices (such as forcing adherents to act in strange ways or sacrifice valuable property) are in fact crucial screening devices; organizations which embrace these “irrational” practices often grow the fastest (at least initially). Work has also shown that religious faith does not wilt in the face of scientific knowledge. This article deals with religious markets, focusing on theories of interreligious competition and congregations' awareness or concern about competition with secular forces vis à vis religious forces. It argues that work on religious competition has focused too narrowly on competition among congregations, and that more work should be done examining religious responses to secular phenomena.