The Efficiency of the NASCAR Reward System: Initial Empirical Evidence

This article reports empirical tests of the hypotheses developed by Peter von Allmen regarding the inefficiency of a nonlinear reward system in NASCAR. Using season level data from 1949 through 2001, we find that there is less than a one-to-one relationship between the concentration of performance a...

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Bibliographic Details
Published in:Journal of sports economics 2004-11, Vol.5 (4), p.371-386
Main Authors: Depken, Craig A., Wilson, Dennis P.
Format: Article
Language:English
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Summary:This article reports empirical tests of the hypotheses developed by Peter von Allmen regarding the inefficiency of a nonlinear reward system in NASCAR. Using season level data from 1949 through 2001, we find that there is less than a one-to-one relationship between the concentration of performance and the concentration of dollar rewards, offering support for von Allmen’s sabotage hypothesis. Granger causality tests indicate that performance-points concentration does not Granger cause winnings concentration, and vice versa. This detracts from von Allmen’s cost hypothesis, although not necessarily from his intuition regarding the hypothesis’s validity.
ISSN:1527-0025
1552-7794
DOI:10.1177/1527002503260559