Fooled by Performance Randomness

Overrewarding Luck

Bibliographic Data

ID19319486
AuthorsRomain Gauriot (0000-0002-7633-7086, New York University Abu Dhabi), Leo Page (0000-0002-6020-9733, University of Technology Sydney), Lionel Page (University of Technology Sydney)
Year2019
Volume101
Issue4
Pages658-666
Publication date2019-10-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueThe Review of Economics and Statistics (JOURNAL)
Journal identifiersISSN: 0034-6535 • E-ISSN: 1530-9142
PublisherMIT Press - Journals (PUBLISHER)
DOI10.1162/rest_a_00783
OpenAlexW2604343939
LanguageEN
Citations received8
References cited15

We provide evidence of a violation of the informativeness principle whereby lucky successes are overly rewarded. We isolate a quasi-experimental situation where the success of an agent is as good as random. To do so, we use high-quality data on football (soccer) matches and select shots on goal that landed on the goal posts. Using nonscoring shots, taken from a similar location on the pitch, as counterfactuals to scoring shots, we estimate the causal effect of a lucky success (goal) on the evaluation of the player's performance. We find clear evidence that luck is overly influencing managers' decisions and evaluators' ratings. Our results suggest that this phenomenon is likely to be widespread in economic organizations

Advertising · Business · Counterfactual conditional · Counterfactual thinking · Econometrics · Economics · Epistemology · Football · Herding · Luck · Operations research · Political science · Positive economics · Quality (philosophy) · Randomness · Statistics · Computer Science · Decision-Making and Behavioral Economics · Experimental Behavioral Economics Studies · History · Law · Mathematics · Psychology · Social Psychology · Sports Analytics and Performance

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