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The Efficiency of the NASCAR Reward System

Initial Empirical Evidence

Dennis P. Wilson

University of Texas at Arlington

This article reports empirical tests of the hypotheses developed by Peter von Allmen regarding the inefficiency of a nonlinear reward system in NASCAR. Using season level data from 1949 through 2001, we find that there is less than a one-to-one relationship between the concentration of performance and the concentration of dollar rewards, offering support for von Allmen’s sabotage hypothesis. Granger causality tests indicate that performance-points concentration does not Granger cause winnings concentration, and vice versa. This detracts from von Allmen’s cost hypothesis, although not necessarily from his intuition regarding the hypothesis’s validity.

Key Words: tournament structure • autocorrelation • Granger causality • competitive balance

Journal of Sports Economics, Vol. 5, No. 4, 371-386 (2004)
DOI: 10.1177/1527002503260559


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