A sideways look at economics
More than you might imagine according to a 2006 study entitled ‘Sabotage in Tournaments: Making the Beautiful Game a Bit Less Beautiful’. The authors analyse football games in the Spanish La Liga to investigate the incentives for players to engage in brazen sabotage activities similar to those portrayed in the hit TV series The Office. Sabotage activities are as old as humankind: just ask Cain and Abel, Romulus and Remus, Julius Caesar or the Miliband brothers. I’m sure that most readers will have routinely encountered, if not engaged in, sabotage activities such foul-mouthing, back-stabbing, withholding key information and setting colleagues on a path to failure. My wife has told me many [anonymous] sometimes hilarious tales of such activities, courtesy of her HR career. I am also very thankful to the authors of this paper as I can now ‘study’ football games as part of my quest to unearth new evidence supporting her professional judgement.
One of the most interesting findings of the paper is that when rewards are increased, effort is also increased, but tends to be offset by a rise in sabotage activities. As David Brent would point out: “you have to be 100% behind someone before you can stab them in the back”. The authors get to a similar conclusion by comparing teams’ effort and style of play before and after the introduction of three points for winning a match. They demonstrate how the increased reward for winning generally led to more attacking football, but also led to a significant drop in the number of goals scored. This came about because teams that were winning by a small margin had a greater incentive to freeze games by engaging in more defensive play (i.e. fouls, more defenders, etc.) leading to more matches with fewer goals. The authors also showed that there was a significant drop in fans’ attendance when the home team was hosting an opposition with a reputation for sabotage or defensive play. These findings have much deeper meaning and applicability than impressing mates at a pub quiz. For example, if office politics can have a detrimental effect on output (lower attendance) via lost productivity (fewer goals), then an employer should think carefully about the level of reward and competition that it encourages among workers (three vs. two points).
Collusion among employees to lower effort (i.e. laziness) and favouritism are two pervasive traits of office politics where I was surprised to find that economics has meaningfully added to the debate. For example, a rather dense paper sheds some more light on why employers may show favouritism — widely regarded as one of the most important sources of work conflict and distorted incentives. The paper puts forward the idea that it may be optimal for an employer to engage in some level of covert favouritism as an effective and strategic decision to prevent collusion among employees. In other words, playing favourites allows an employer to consciously introduce a conflict among a group of employees who conspire to be lazy. A word of caution emerges though for organisations that rely on team rather than individual efforts. In this case, strategic favouritism would undermine the cooperative relationship within the team and create a trade-off for the employer between fighting collusion and fostering cooperation. David Brent’s underrated management advice had this covered too: “you just have to accept that some days you are the pigeon, and some days you are the statue”. José Mourinho is probably the best footballing embodiment of both how to and how to not engage in strategic favouritism. His biggest successes were arguably built on his ability to avoid dressing room collusion through the praise and management of big egos, including his own. The opposite can also be said for his failures.
Even more surprising, football turns out to offer another interesting perspective on favouritism. Another paper shows how referees seem willing to play favourites in a way that goes against their own career self-interest (referees that are too biased tend to be dropped), in order to please the home crowd and conform to social pressures. Their favouritism takes the form of a systematic bias towards the home team when awarding injury time, particularly for close matches (adding more time if they are narrowly losing and less if they are narrowly winning). Referees were also more likely to be biased when the team reward increased (as after the introduction of the three points for a win) and when there was a large crowd supporting the home team. The lesson here is that supervisors may be driven in their preferences by altruistic motives or social pressures as well as monetary ones such as maximising profits. In David Brent’s own words again, any respectable boss should strive to create: “an atmosphere where I’m a friend first and a boss second. Probably an entertainer third”. Or maybe they should just recommend reading TFiF.
 Prendergast and Topel (1993) argue that favouritism can give rise to inefficiency through rent seeking behaviour and by making it difficult to evaluate the true talent of workers. Somewhat less formally my wife also concurs.