Handbook of Behavioral Industrial Organization
The Handbook of Behavioral Industrial Organization integrates behavioral economics into industrial organization. Chapters cover concepts such as relative thinking, salience, shrouded attributes, cognitive dissonance, motivated reasoning, confirmation bias, overconfidence, status quo bias, social cooperation and identity. Additional chapters consider industry issues, such as sports and gambling industries, neuroeconomic studies of brands and advertising, and behavioral antitrust law. The Handbook features a wide array of methods (literature surveys, experimental and econometric research, and theoretical modelling), facilitating accessibility to a wide audience.
This chapter reviews existing theoretical and empirical literature on the intercollegiate and professional sports industries, including professional and intercollegiate sports leagues and the fitness center/health club industry, from a behavioral economic perspective. These represent interesting settings for behavioral economic research. In sports leagues, firm inputs and outputs are accurately measured, as is individual worker performance. Interaction among organizations in this setting can be measured, and a number of interesting regulations, like entry drafts and salary caps, generate powerful incentives. In addition, individual decisions made by customers in the sports industry, fans of teams, can be readily measured, and these decisions depend on the standard economic factors (prices and income) as well as uncertainty about an important feature of the core product: game outcomes. This has proven to be a fruitful area of behavioral economic research, and behavioral economic approaches have provided new insight into economic decisions in this setting.