This paper utilizes Tournament Theory and the Efficiency Wage Theory, to estimate if an athlete’s performance fluctuates in the National Basketball Association (NBA) with the impact of being paid over the top large sum salaries. The data obtained was 43 professional NBA athletes with the top player efficiency rating in the season of 2009-2010, according to John Hollinger. The observations then last from the season of 2009-2010 to the season of 2011-2012. The model relates an athlete’s salary and incentives such as playoffs and All-Star status in comparison to their marginal revenue product. The results show that athletes being paid above the average salary will increase their player efficiency rating by putting forth more effort by becoming more statistically significant to their team. Although all these sources were gained publicly, more intensive material in direct contract agreements will lead to stronger significant results for the correlation of athletes being paid above their marginal revenue productivity and their effort put forth in their job.
Halsey, Levi D., "Does the Overpayment of Athletes Affect Performance? A Study of the National Basketball Association" (2014). Senior Independent Study Theses. Paper 5853.
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2014 Levi D. Halsey