broiler industry, and Garicano and Palacios-Huerta (2005) for evidence on the effects of
higher prize differentials on both creative and destructive effort in soccer.
The only paper we are aware of that provides (indirect) evidence that anticipated
winning chances affect effort is Brown (2008),9 who investigates the impact of superstar
Tiger Woods’ presence in golf tournaments using panel data. Her main result is that Tiger
Woods’ tournament participations had adverse effects on the performances of his competi-
tors. Our paper’s contribution to her study is threefold. First, we are able to construct a
variable capturing each player’s individual national team nomination chance. This allows
us to test predictions concerning the relation between expected winning chances and effort
incentives not only more directly but also more completely than Brown (2008). Second,
we provide evidence in a situation where payoffs depend on perceived abilities, which is
very common in (external and internal) labor markets but has received little attention
in the empirical literature so far. Finally, the institutional characteristic that players of
many different nationalities work for the same clubs but only some nations participate in
the Euro Cup allows us to conduct an analysis akin to a randomized experiment, which
strengthens causal interpretations.1011
The literature testing the predictions of career concerns theory is small. Gibbons and
Murphy (1992) find evidence that the sensitivity of contracted pay to performance for US
executives increases as retirement approaches, which is consistent with optimal incentive
contracting in the presence of career concerns. Chevalier and Ellison (1999a) find that
younger fund managers are more likely to be fired for poor performance than more senior
fund managers, and that younger managers are less likely to take unusual or bold actions.
Hong, Kubik and Solomon (2000) reach similar conclusions examining security analysts.
Chevalier and Ellison (1999b) also provide evidence that older managers perform worse
than younger managers. They conclude that ”younger managers are likely to work harder
because they have a longer career ahead of them and because, as we show, they are more
9 Sunde (2003) finds a negative correlation between the heterogeneity of opponents and the number of
games in tennis matches. Interpreting these results in terms of effort incentives is problematic, however,
since the same correlation would be expected even if effort played no role in tennis.
10 Miguel, Saiegh and Satyanath (2008) also exploit the fact that the top soccer teams employ players
of many different nationalities to test whether there is a relation between violence on the soccer field and
cultural background.
11 Brown (2008) deals with the problem of unobserved heterogeneity due to superstar Tiger Woods’s
decision to enter only certain tournaments by narrowing the sample to golf courses on which Tiger Woods
has competed in some years only.