Incentive pay and decision quality: evidence from NCAA football coaches

Abstract

Using play-by-play American football data and panel data on head coach remuneration, we test whether a head coach's incentive pay affects the quality of their decisions. We proceed by first estimating an 'optimal strategy' for first-down offensive plays, then investigate whether the gap between actual and optimal choices is affected by incentive pay. In contrast to merely looking at the outcome of an agent's choice, our approach considers the decision environment and the resources available. We find a small, but significant, negative effect of incentive pay on decision quality. Critically, this effect is not found when looking at raw outcome measures. (J33; C23)