Wednesday, December 19, 2007

Incentives in College Football

In our framework for diagnosing and solving problems in business organizations, a key question concerns the incentives of employees making decisions (how are they evaluated and compensated).

Gregg Easterbrook, who writes the Tuesday Morning Quarterback column (highly recommended for football fans!), traces the phenomenon of big-time college football programs running up the score to the incentives of college coaches. He notes that in many cases a significant portion of a head coach's salary is paid for by boosters. As an example, Bobby Petrino (or Petrino the Weasel as TMQ calls him) will receive a salary of $2.85 million, $2 million of which comes from the booster fund. Easterbrook argues that your average booster likes to bet on college football games, so coaches better make sure they cover the spread to keep their true employers happy.

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