Human capital theory, one of the cornerstones of modern labor and personnel economics, posits tha... more Human capital theory, one of the cornerstones of modern labor and personnel economics, posits that individual salaries are a function of a person's skills and abilities. Irrespective of its undisputed theoretical importance and practical relevance, the empirical evidence on the impact of personality traits and characteristics on salaries, however, remains limited and inconclusive because most of the existing literature is based on self-reported questionnaire responses. Therefore, we include in our estimations not only the ‘traditional’ measures of a person's human capital, but also analyze the impact of an individual's personality traits that have so far been mostly neglected in the context of income determination. We avoid the ‘subjectivity bias’ that has been criticized in the previous literature and use an unbalanced panel including approximately 200 professional basketball players from the National Basketball Association in the four seasons 2003/2004–2006/2007. With ...
In this paper, we address the problem of sabotage in tournaments with heterogeneous contestants. ... more In this paper, we address the problem of sabotage in tournaments with heterogeneous contestants. In a first step, we develop a formal model, which yields the prediction that favorites exert higher productive effort, while underdogs are more tempted to engage in destructive actions (sabotage). This is because favorites have a higher return on productive effort and both types of effort are substitutes. In a second step, we use data from German professional soccer to test this prediction. In line with the model, we find that favorite teams win more tackles in a fair way, while underdog teams commit more fouls.
We use monthly data from 25 production units in a German steel plant over the period 1992 to 2001... more We use monthly data from 25 production units in a German steel plant over the period 1992 to 2001 to test for impacts of teamwork and performance-related pay on productivity, acci- dents and absence rates. We find that teamwork and performance pay incentivize workers to in- crease quantity at the expense of quality and to run the machines for long
ABSTRACT A vast and often confusing economics literature relates competition to investment in inn... more ABSTRACT A vast and often confusing economics literature relates competition to investment in innovation. Following Joseph Schumpeter, one view is that monopoly and large scale promote investment in research and development by allowing a firm to capture a larger fraction of its benefits and by providing a more stable platform for a firm to invest in R&D. Others argue that competition promotes innovation by increasing the cost to a firm that fails to innovate. This lecture surveys the literature at a level that is appropriate for an advanced undergraduate or graduate class and attempts to identify primary determinants of investment in R&D. Key issues are the extent of competition in product markets and in R&D, the degree of protection from imitators, and the dynamics of R&D competition. Competition in the product market using existing technologies increases the incentive to invest in R&D for inventions that are protected from imitators (e.g., by strong patent rights). Competition in R&D can speed the arrival of innovations. Without exclusive rights to an innovation, competition in the product market can reduce incentives to invest in R&D by reducing each innovator's payoff. There are many complications. Under some circumstances, a firm with market power has an incentive and ability to preempt rivals, and the dynamics of innovation competition can make it unprofitable for others to catch up to a firm that is ahead in an innovation race.
This article analyses how long head coaches survive in the clubs of the first German football lea... more This article analyses how long head coaches survive in the clubs of the first German football league (‘Bundesliga’), where the dismissal of a presumably weak coach is a generally adopted procedure in case of a poor sporting performance of the team. We use duration models for repeated events to accommodate the correlation within individuals. We find that the head coaches
Due to their limited financial resources winning the national championship or qualifying for an i... more Due to their limited financial resources winning the national championship or qualifying for an international cup competition is not a viable option for most small market clubs in any of the European professional team sports leagues, such as soccer, ice hockey, basketball or handball. However, since a particularly poor performance is usually punished by relegation and since being relegated to the respective second division is associated with a dramatic decline in revenues, avoiding relegation is a target in itself. Using data from seven different professional team sports leagues in four different countries we estimate various parametric and semi-parametric regression models to identify the determinants of the clubs’ length of stay in their respective first division. In line with the organizational ecology literature we find that club experience, previous club performance (number of previous championship titles and number of previous relegations) and market size (average attendance) ...
This article analyzes the dismissal of head coaches in the top tier of German professional footba... more This article analyzes the dismissal of head coaches in the top tier of German professional football, the ''Bundesliga". A random parameter logit model is used to analyse the characteristics that are associated with the probability of a coach to be dismissed, taking into account uncontrolled heterogeneity of the data. Policy implications are presented.
Human capital theory, one of the cornerstones of modern labor and personnel economics, posits tha... more Human capital theory, one of the cornerstones of modern labor and personnel economics, posits that individual salaries are a function of a person's skills and abilities. Irrespective of its undisputed theoretical importance and practical relevance, the empirical evidence on the impact of personality traits and characteristics on salaries, however, remains limited and inconclusive because most of the existing literature is based on self-reported questionnaire responses. Therefore, we include in our estimations not only the ‘traditional’ measures of a person's human capital, but also analyze the impact of an individual's personality traits that have so far been mostly neglected in the context of income determination. We avoid the ‘subjectivity bias’ that has been criticized in the previous literature and use an unbalanced panel including approximately 200 professional basketball players from the National Basketball Association in the four seasons 2003/2004–2006/2007. With ...
In this paper, we address the problem of sabotage in tournaments with heterogeneous contestants. ... more In this paper, we address the problem of sabotage in tournaments with heterogeneous contestants. In a first step, we develop a formal model, which yields the prediction that favorites exert higher productive effort, while underdogs are more tempted to engage in destructive actions (sabotage). This is because favorites have a higher return on productive effort and both types of effort are substitutes. In a second step, we use data from German professional soccer to test this prediction. In line with the model, we find that favorite teams win more tackles in a fair way, while underdog teams commit more fouls.
We use monthly data from 25 production units in a German steel plant over the period 1992 to 2001... more We use monthly data from 25 production units in a German steel plant over the period 1992 to 2001 to test for impacts of teamwork and performance-related pay on productivity, acci- dents and absence rates. We find that teamwork and performance pay incentivize workers to in- crease quantity at the expense of quality and to run the machines for long
ABSTRACT A vast and often confusing economics literature relates competition to investment in inn... more ABSTRACT A vast and often confusing economics literature relates competition to investment in innovation. Following Joseph Schumpeter, one view is that monopoly and large scale promote investment in research and development by allowing a firm to capture a larger fraction of its benefits and by providing a more stable platform for a firm to invest in R&D. Others argue that competition promotes innovation by increasing the cost to a firm that fails to innovate. This lecture surveys the literature at a level that is appropriate for an advanced undergraduate or graduate class and attempts to identify primary determinants of investment in R&D. Key issues are the extent of competition in product markets and in R&D, the degree of protection from imitators, and the dynamics of R&D competition. Competition in the product market using existing technologies increases the incentive to invest in R&D for inventions that are protected from imitators (e.g., by strong patent rights). Competition in R&D can speed the arrival of innovations. Without exclusive rights to an innovation, competition in the product market can reduce incentives to invest in R&D by reducing each innovator's payoff. There are many complications. Under some circumstances, a firm with market power has an incentive and ability to preempt rivals, and the dynamics of innovation competition can make it unprofitable for others to catch up to a firm that is ahead in an innovation race.
This article analyses how long head coaches survive in the clubs of the first German football lea... more This article analyses how long head coaches survive in the clubs of the first German football league (‘Bundesliga’), where the dismissal of a presumably weak coach is a generally adopted procedure in case of a poor sporting performance of the team. We use duration models for repeated events to accommodate the correlation within individuals. We find that the head coaches
Due to their limited financial resources winning the national championship or qualifying for an i... more Due to their limited financial resources winning the national championship or qualifying for an international cup competition is not a viable option for most small market clubs in any of the European professional team sports leagues, such as soccer, ice hockey, basketball or handball. However, since a particularly poor performance is usually punished by relegation and since being relegated to the respective second division is associated with a dramatic decline in revenues, avoiding relegation is a target in itself. Using data from seven different professional team sports leagues in four different countries we estimate various parametric and semi-parametric regression models to identify the determinants of the clubs’ length of stay in their respective first division. In line with the organizational ecology literature we find that club experience, previous club performance (number of previous championship titles and number of previous relegations) and market size (average attendance) ...
This article analyzes the dismissal of head coaches in the top tier of German professional footba... more This article analyzes the dismissal of head coaches in the top tier of German professional football, the ''Bundesliga". A random parameter logit model is used to analyse the characteristics that are associated with the probability of a coach to be dismissed, taking into account uncontrolled heterogeneity of the data. Policy implications are presented.
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Papers by Bernd Frick