Incentives and Outcomes in a Strategic Setting: The 3-Points-for-a-Win System in Soccer

I. INTRODUCTION The behavior of agents in a strategic contest is a central concern of economic models, and the notion of Nash equilibrium (and various extensions and refinements thereof) is the guiding principle of analysis. Results in this setting are often sensitive to the structure of the interaction, and taking models' predictions to an empirical test is a notoriously difficult task. Contests are the quintessential characteristic of sport and thus sport situations share a number of features with economic problems that arise in many other contexts. Because sport competitions have clear-cut rules, competitors are strongly motivated, and relevant data are often observable, sport settings are proving to be a fruitful area of empirical inquiry to test important tenets of economic models. For example, the notion of Nash equilibrium has been put to a direct test by using data on serve choices in tennis matches in Walker and Wooders (2001) and Hsu, Huang, and Tang (2007); soccer penalty kicks data in Chiappori, Levitt, and Grose-close (2002) and Palacios-Huerta (2003); and near-post, far-post soccer goals in Moschini (2004). The results of these studies are both interesting and encouraging and broadly support the notion that players' choices are in accord with equilibrium predictions. In this article, I propose to use soccer (association football) data in a new direction to investigate the impact of a major structural change in the organization of soccer competitions that took place in the mid-1990s. Most national soccer competitions are typically organized as double round robin tournaments in which every team plays all others in its league twice (at home and away). Points earned in every match are added together, and rewards are assigned according to the totals earned in the entire competition. (1) Unlike some other sports, drawn matches are common in soccer, and the point system determines their importance relative to victories. The traditional way to handle that was the 2-l-0 system, whereby a tie was worth half as much as a victory (and a loss was worth nothing). England first replaced that with a 3-1-0 system (3 points for a win and 1 point for a tie) starting in the 1981/1982 season in an effort to promote a more attacking brand of soccer. A few other countries followed suit in the years that followed, but the new system became widespread after it was embraced by Federation Internationale de Football Association (FIFA), the game's world governing body, to structure the initial (round-robin) phase of the 1994 World Cup. In the years that followed, virtually every country adopted the new 3-point system. The widespread and systematic introduction of the 3-point system in soccer provides an interesting natural experiment to investigate the effects of changing rewards and incentives on outcomes in a tournament setting. Did the increased weight given to victories translate into more attacking play and goals as per the hopeful expectation? And is that really what one should expect from such a structural change anyway? A few studies that have investigated such questions have stressed some negative results. Brocas and Carrillo (2004) develop a conceptual model of a soccer match as a two-stage game and cast doubts on the expectation that the rule change in question necessarily induces more attack. Their main point is that the new system, while encouraging more attack toward the end of the game, may also induce teams to play more defensively at the beginning of the game. Correira Guedes and Machado (2002) similarly note possible unintended effects of the point system change due to asymmetric abilities (underdogs facing rivals of superior abilities may actually reduce their level of offense). Garicano and Palacios-Huerta (2005) emphasize the added incentive for sabotage tactics that the new point system may induce. In this article, I reconsider the question of whether the introduction of the 3-1-0 point system in soccer actually has had significant effects. …