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Article Excerpt
I. INTRODUCTION
Do social forces affect decisions or actions of individuals? And if so, under what circumstances do social influences determine socioeconomic behaviors? These are important questions for economists to answer. Sociologists and social psychologists widely acknowledge that individuals' decisions are not only governed by their material payoffs but also influenced by nonmaterial social payoffs that arise in the decision makers' social environment, for example, in the form of social approval of social sanctions, as argued, for example, by Asch (1951) or Coleman (1990). This type of social pressure can cause individuals to make decisions that accommodate the preferences of a social group even if they are not in accordance with the decision maker's own interest. I refer to this view as the "social pressure hypothesis."
Economists have built on the idea that social forces might affect individual behavior and have developed models of social interaction in which the quest for social rewards or the avoidance of social sanctions can explain adherence to social custom as, for example, in Akerlof (1980) as well as the evolution and persistency of social norms as in Bernheim (1994). (1) In these models, social payoffs, which comprise social approval or sanctions, become an argument in the utility function in addition to intrinsic consumption utility, which captures material payoffs. Several other scholars (e.g., Becker and Murphy 2000) have used such a framework that generalizes an individual's utility function to internalize social payoffs to analyze how social influences affect a variety of socioeconomic behaviors, consumption, status, as well as the evolution of norms, fads, and fashions. (2)
Despite much theoretical progress, there is little empirical evidence that convincingly assesses the role of social influences, not least because data that meet the necessary requirements are scarce. (3) A useful type of data would record how a decision maker behaves in different social environments, where different social groups have well-defined, and potentially conflicting, interests that are not aligned with the interests of the individual decision maker. Garicano, Palacios-Huerta, and Prendergast (2005) exploit the fact that soccer matches offer such a setting and provide one of the few pieces of empirical evidence. In a soccer match, it is in the referee's private interest to be impartial while fans in each camp derive utility from their team's success and therefore have an interest to work toward their common goal by sanctioning referee decisions that do not favor their preferred team and by approving favorable decisions. Analyzing data from two seasons of the Spanish premier soccer league, the Primera Division, Garicano, Palacios-Huerta, and Prendergast (2005) detect that Spanish referees favor the home team by prolonging the match by almost 2 min when the home team is one goal behind at the end of regulation time compared to the situation in which the home team is leading by one goal. They also investigate whether crowd size and the ratio of attendance-to-capacity matters and find that a one standard deviation increase in attendance increases the bias by about 20%, while a higher attendance-to-capacity ratio reduces the bias. They conclude that nonmonetary incentives, in particular social pressure from the crowd, cause the preferential treatment. (4) Sutter and Kocher (2004) report corroborative findings based on data from the 2000 to 2001 season in the German premier soccer league (1. Bundesliga), although they do not assess whether crowd attributes affect the magnitude and significance of home-biased refereeing.
This paper provides complementary evidence of referee bias based on data from 3,519 games of the 1. Bundesliga, which supports the view that the social environment can affect individual's decisions. The empirical analysis that professional referees, who are appointed and paid by the German Football Association (DFB) and are expected to be impartial, in fact systematically favor the home team. Favoritism is manifested in stoppage time decisions and in decisions to award goals and penalty kicks. The data also provide new evidence that crowd characteristics such as crowd composition and distance to the soccer field impair referees' decisions in a way that is consistent with the social pressure hypothesis, that is, that social forces influence individual behavior. I find that the size of the bias depends on the composition of the crowd: the home bias tends to be smaller when more supporters of the visiting side attend the match. This is consistent with the idea that social approval and social sanctions have countervailing effects on net social rewards. We expect supporters of each side, who have the common interest that their preferred team achieves success, to work toward this common goal by acclaiming favorable decisions of the referee and by expressing dissatisfaction with unfavorable referee decisions. Referees' decisions hence evoke social approval from supporters of the favored team and social sanctions from the opponent side. A referee who is not inherently biased, that is, who does not derive intrinsic utility from a particular match outcome and values social payoffs, is expected to weight the social costs and benefits.
Strikingly, home team favoritism is found to be stronger when the match takes place in a stadium without a running track, that is, when the crowd is physically closer to the field and to the referee, in which case the intensity of social pressure is arguably higher. (5) This finding lends support for the conjecture that social forces influence the referees' decision, be it because social pressure from the crowd directly triggers-biased refereeing or because of a more oblique channel, in which, for example, the crowd creates an atmosphere that encourages the players on the field to exert pressure on the referee. Since the nature of biased refereeing is affected by the crowd's proximity to the field, we can dismiss an alternative mechanism that leads to home-biased decisions, namely that the DFB condones the preferential treatment of home teams of even instructs its referees to favor home teams. Even a soccer association with strong preferences for nondiscriminatory competition might rationally accept home-biased refereeing as long as the referees' preferential treatment was exactly the same for all home teams such that the resulting home advantage would balance out over the season and therefore would not affect the outcome of the championship. This could be an optimal policy to maximize gate revenues if attendance was boosted when the home team is more likely to win, as Garicano, Palacios-Huerta, and Prendergast (2005) discuss. However, given the fact that teams who play in stadiums with an athletics track are affected differently than teams who play in a stadium without a track, this mechanism is implausible.
In fact, the DFB monitors the quality of refereeing and sacks a referee if he is detected to be biased so that being partial lowers reappointment probabilities. (6) Since remuneration amounted to more than 3,000 Euros (~US$4,000) per match at the end of the observation period, biased refereeing entails substantial expected pecuniary losses for umpires. This suggests that referees are induced to favoritism by social forces, although they have a strong intrinsic motivation for impartiality. In summary, the findings indicate that social groups can influence individuals to work toward achieving an outcome desired by that group (and to adhere to the groups' social norm) even if individuals do not derive utility from the outcome and adherence to the norm is diametrically opposed to their own private interest.
The remainder of the paper is organized as follows. Section II provides some institutional background and describes the data. Section III presents the empirical results and Section IV concludes.
II. BACKGROUND AND DATA
The data were made available for scientific use by IMP--Innovative Medientechnik und Planung A G, a company that maintains the official soccer database of the DFL Deutsche Fussball Liga GmbH, the German soccer league association, and cover all 3,519 matches that were played in the German premier soccer league (1. Bundesliga) since the start of the season 1992/1993 until the first half of the season 2003/2004). IMP AG sends several observers to each league match who record about 2,000 actions per match, including all goals, shots on goal, tackles, passes, corner kicks, every single ball contact, yellow and red cards, as well as the number of injury treatments on the field. Various match statistics are provided separately for both periods of the match, including the amount of stoppage time in each half. The data also record the date, destination, and outcome of the match, the number of spectators, and the referee's identity.
The I. Bundesliga consists of 18 teams that compete for the national soccer championship. Teams play each other twice a season, once during rounds 1-17 and once during rounds 18-34 when the status of home and visiting team is reversed. (7) The outcome of a match (i.e., a win, a draw, or a loss) determines the number of points that are allocated to the teams: no points are allocated...
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