Implicit Incentives in Football: An Empirical Analysis of Performance Measurement for NFL Players (thesis)

Abstract

In this study, I examine how team-based and individual performance metrics are incorporated into NFL players' contracts. The current research in performance evaluation and incentive contract design suggests that a mixed incentive structure that uses both teambased and individual metrics is optimal for increasing performance when results are dependent on team efforts. However, within the NFL, in which outcomes are driven by team performance, contracts almost always incorporate primarily individual incentives. Using new contract signings, team and individual performance data from the 2015-2020 NFL seasons, I test whether there are team-based incentives are implicitly and incrementally used (in addition to individual metrics) within NFL contracts. Results of this study indicate that players are being paid based on overall team performance alongside individual performance, showing that NFL contracts are using a mixed incentive structure. My findings build on the literature on performance measurement and add to the understanding of the incentive effects of NFL player contracts.