All posts by Biju Dominic

Can Brazil still win the World Cup?

brazil-2014-world-cup-team

Brazil lost it’s star player in the game against Colombia. Some say they may have lost the world cup as well.  But does Brazil still have a upper hand over Germany today? Can playing at home give them the much needed edge? We believe it does. 

What constitutes this home advantage? Is it just the extra adrenalin flow when you the hear the roar of thousands supporting you? Or is there something sinister about it? Do referees who are suppose to be impartial tend to contribute to this home team advantage? 

Chicago Booth Business School has analysed several studies in this area and have come to some startling revelations. Yes, the referees have a bias towards the home team. The biases were clearly evident when it comes to taking that crucial decision as to how much injury time gets added to the game. 

Referees add extra time at the end of a match to make up for the time lost due injuries, substitutions or any other interruptions that could happen in a match. For the players, the coach and more so the fans the importance of the amount of time added to the game depends on the context at the scheduled end of the game. If  either of the teams are leading by a large number of goals at the regular 90 minutes of the game, nobody is really bothered about how many extra minutes get added to the game. But  if your team is trailing by a goal you will be happier if more injury time is added to the game. But if your team is leading by a slender margin of just one goal you will want the match to end as soon as possible. So the less the injury time gets added to the game the happier you are. 

Studies by Canice Prendenergast of Chicago Booth Business School and Luis Garicano and Ignacio Palacios Huerta of London School of Economics are showing that referees add on an average 2.93 minutes of injury time. But the crucial question is whether this average is affected by any bias. The surprising truth this study show is that the referees are biased while deciding the duration of time that gets added to a game. These researchers found that referees add 35% more than average time to a match when the crowd want the match to continue longer and add 29% less than average time when the crowd want the match to end earlier. If either of the teams are leading by a large number of goals, the added injury time is close to the average time. 

What  causes the referees to make these biased decisions? Blame it on the social pressure exerted by the home fans. The size and noise generated by the home crowd is a  key determinant that influences referees decisions.  It is also interesting to note that when match has few spectators or when the visiting fans are large in number, the tendency of the referee to take these biased decisions decrease. This was confirmed by a study by Per Pettersson-Lidbom and Mikael Priks of 21 Italian League matches which were played with no spectators. The authorities had asked the teams to play in front of empty stadiums due to the previous unruly behaviours of the spectators of those clubs. The studies confirmed that when there are no fans in the stadium, referees don’t display any bias.  

Now, we cannot play the game without fans. There may be less extreme solutions too. Studies in Germany show that when the football field is surrounded by a running track, there by  creating larger physical distance between the fans and the referee, the tendency of the referee to take biased decisions decrease.     

A soccer referee is assumed to be an epitome of unbiased behaviour. But the above studies are showing that even they are susceptible to behaviour biases. So this soccer world cup is not just a showpiece of human athleticism, but also a stage that displays the frailties of human behaviour, of the fans, players, coaches  and surprisingly that of the referees too. Lets see if Brazil is able to exploit these in the next game.

 

Development, or just a U turn?

Cows Tilling the Field | Machra

There is now a huge debate between development and its consequences. Development, which leads to change in the environment and displacement of those living in that environment.  It is believed that a fair compensation and rehabilitation – providing alternate livelihood – could amicably solve this conflict.

What is a fair compensation system for those displaced by developmental projects? The existing compensation structure is calculated on  principles of classical economics. According to this theory, the true value of all factors involved in a transaction can be calculated basis market forces. And as long as this value is exchanged in lieu of the land, it is a fair transaction. Any amount that is given over and above this amount makes it even more fair.

New sciences like Behavioural Economics and Cognitive Neurology looks at these as issues not only as numbers on a spreadsheet. Behavioural Economics have brought into focus the irrational nature of human beings and Cognitive Neurology helps understand the adaptability of human brain to new surroundings.  Looking through the lens of these new sciences, even a compensation thats much higher than market prices will be considered grossly unfair.

Why is this so? Continue reading Development, or just a U turn?

Indian Budget: Last-mile behavioural problems


Picture from It happens in India

In this year’s budget, the government announced direct cash transfers as an alternate to the existing subsidy on kerosene and fertilizers to prevent leakages. This solution is a major step forward in plugging one of the biggest loopholes of our economic system. This circumvents the corrupt middle men who have been usurping these subsidies for a long time. But, what are the odds that middle men will not usurp this money, meant to light the kerosene lamps in all village homes, by setting up  liquor and gambling dens?

These vagaries in the individual’s behaviour who is enjoying the fruits of government expenditure is not only undoing the benefits of those expenditures but also creating more complex problems than that  existed before. Continue reading Indian Budget: Last-mile behavioural problems