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Essays on Behavioural Finance and Sports Economics

Aboualhasan, Husain (2021) Essays on Behavioural Finance and Sports Economics. PhD thesis, University of Essex.

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We examined two fields within the behavioural finance framework as well as sports economics. We explored sports clubs’ wages and other team characteristics to explain managerial behaviour with regard to players’ playing time. Additionally, we conjectured that playing at home could affect team performance, and subsequently derived a team success model based on the home venue. The sunk cost concept is central to behavioural economists’ arguments, but evidence has mainly stemmed from laboratory experiments. Empirical evidence pertaining to sunk costs and their role in the decision-making processes is rather sparse. We used a novel dataset of the English Premier League (EPL), which has not been previously utilised, particularly in the context of sunk costs. We examined the frequent manager turnover within teams, where the self-justification explanation suggested that sunk costs may not apply in this case due to managerial change. Our findings provide evidence for a sunk cost effect within a football context where higher transfer fees could predict more playing time for players within different positions. The effect was robust to a number of specifications. Additionally, we provide evidence for managers’ bias towards granting free transferred players more playing time as a way to show their skills in securing bargain deals for their clubs. Lastly, we estimated a regression discontinuity (RD) model to test the effect of expensive players, and the results support the sunk cost hypothesis. Racial discrimination is a topic of considerable debate in the labour economics literature. We employed a novel market test approach that complements the established wage equation estimate approach in a sporting context while controlling for player performance metrics. We estimated the effect of nationality (of both players and managers) on player playing time. The findings suggest that British managers demonstrated bias towards their home players by allocating them extra playing time. This extra playing time could not be explained merely by the players’ performance level, their transfer fees, or playing position. We also re-examined the models of Szymanski (2000) and Pedace (2008) with our recent dataset and found no evidence for discrimination against non-white players or for foreign nationalities. Home field (HF) advantage in competitive sports has garnered much empirical attention. Our panel regression results provide unequivocal evidence of a significantly strong and robust home field effect. We used bootstrap techniques to explore the HF effect in predicting team success and failure in the PL. Our results suggest that teams who outperformed the expected bootstrap results in their early home (as opposed to away) games would be secure in the Premier League. This was still the case even if they performed poorly in away games over this period. This indicates a strong implication that home results dominate away results.

Item Type: Thesis (PhD)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Husain Aboualhasan
Date Deposited: 19 Jan 2021 09:05
Last Modified: 19 Jan 2021 09:05

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