Revenue Sharing as an Incentive in an Agency Problem: An Example from the National Football League
Abstract
We consider a professional sports league's use of a well-defined incentive mechanism, revenue sharing, to encourage the desired behavior of teams in the league. The incentive mechanism works by internalizing externalities that arise across agents (the team owners). We find revenue sharing to be a potentially powerful incentive scheme because in this setting it encourages an optimal distribution of resources among agents. Its effectiveness is mitigated, however, by agents who enjoy private, nonmonetary benefits that are not shared. Using data from the National Football League, we examine how well the propositions explain observed behavior in this relationship.
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Incentivisation is a common means of mitigating the principal-agent problem by aligning the actions of the agents with the goals of the principals.
“Incentivisation is a common means of mitigating the principal–agent problem (Arthur and Jelf 1999; Atkinson et al. 1988; Black and Lynch 2004; Mortimer 2008) by aligning the actions of the agents with the goals of the principals.”
From Content Creators Between Platform Control and User Autonomy: The Role of Algorithms and Revenue Sharing (2023) · cites this paper as Atkinson et al. 1988
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Hödl, T., & Myrach, T. (2023) · Business & Information Systems Engineering · doi:10.1007/s12599-023-00808-9 · Cited by 51 · see citing works
- Authors
- Atkinson, S. E., Stanley, L. R., & Tschirhart, J.
- ORCID
- Stanley, Linda R.
- Venue
- The RAND Journal of Economics
- Publisher
- Wiley
- Published
- 1988
- Volume
- 19
- Issue
- 1
- Pages
- 27
- ISSN
- 0741-6261 (ISSN-L)
- OpenAlex
- W2068198315
- Cited by
- 179
- References
- 0
- Citations by year
- 2025: 1 · 2024: 2 · 2023: 4 · 2022: 6 · 2021: 5 · 2020: 5 · 2019: 6 · 2018: 4 · 2017: 9 · 2016: 8 · 2015: 4 · 2014: 7 · 2013: 5 · 2012: 10
- FWCI
- 0.00
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The RAND Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Sports Analytics and Performance
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Game Theory and Voting Systems
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Keywords
- revenue sharing, principal-agent problem, incentive mechanisms, professional sports leagues, National Football League, team owners, externalities, resource allocation, private benefits
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