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The Efficiency of the NASCAR Reward System

2004; SAGE Publishing; Volume: 5; Issue: 4 Linguagem: Inglês

10.1177/1527002503260559

1552-7794

Craig A. Depken, Dennis Wilson,

Efficiency Analysis Using DEA

This article reports empirical tests of the hypotheses developed by Peter von Allmen regarding the inefficiency of a nonlinear reward system in NASCAR. Using season level data from 1949 through 2001, we find that there is less than a one-to-one relationship between the concentration of performance and the concentration of dollar rewards, offering support for von Allmen’s sabotage hypothesis. Granger causality tests indicate that performance-points concentration does not Granger cause winnings concentration, and vice versa. This detracts from von Allmen’s cost hypothesis, although not necessarily from his intuition regarding the hypothesis’s validity.