Game Theory and Business Strategy

Perverse incentives in soccer

Presumably, the primary goal of any sport governing body is to provide adequate incentive for competitors to do battle on the field (court, pitch, etc.), each striving for victory. Things don't always turn out that way. The National Football League, among other sports bodies, determines the order of the next draft, in which teams select new players for the following season, in part by who has the worst record in the previous season. This is done for the stately aim of evening out the talent among teams, so the worst teams enjoy the greatest improvement by selecting the best players for the future. However, this also creates the incentive for teams to lose towards the end of the season if playoffs are out of reach, to better position themselves for the draft. There is evidence that Basketball teams have lost on purpose, and Baseball has wrestled with similar issues. For the soccer fan, below are two examples of incentives gone awry, the second being my all time favorite for the strangest (incentive-driven) spectacle in sport!

Autogoal in the Tiger Cup

The 1998 Tiger Cup pitted Thailand against Indonesia in the final match of the group stage. Both teams were certain to advance but the outcome of the match would determine the group's winner, who would face the host (and certain favorite to win it all) Vietnam in the semi-finals.

The structure of the tournament was as follows: First, teams are divided into two groups and every member of a group plays every other member once. Then, the top two teams from each group advance. The winner of one group plays the second-place team from the other. The reason for this is again noble — to reward the winning team with an easier match. However, Group B saw the favorite, Vietnam, place second to rival Singapore. Both teams were undefeated (the game in which they met each other resulted in a draw), but Singapore earned the higher standing due to its 2-0 win over Malaysia, who Vietnam bested by only 1-0. Many soccer enthusiasts would argue that a 1-0 victory is not worse than a 2-0 victory as it may imply only that a team played more defensively after the first goal. This is not important for our purposes, since what is important is that the winner of the match between Thailand and Indonesia would have to play Vietnam next and neither team found this to be much of a reward.

The match proceeded with very little fanfare for the first half, with neither team making any effort to score. After several cautions by the official, the second half saw two unenthusiastic goals by each side. With only seconds left in the match (in injury time, for aficionados), Indonesian player Mursyid Effendi turned towards his own goal and scored. As a result, Indonesia lost forcing Thailand to face Vietnam.

Whether it be karma, the work of a vengeful deity, or universal justice, Indonesia lost to Singapore in the semi-finals who, in turn, won the tournament after defeating Vietnam in the finals. Thailand and Indonesia played in the playoff for third place, drawing to a 3-3 tie (Thailand losing on penalty kicks). Additional punishment was handed down from the Asian Football Confederation, which suspended both Thailand and Indonesia from play for three months, in addition to imposing fines. The goal scorer, Mursyid Effendi, received a lifetime ban from soccer.

Which goal is mine?

The above example is just one in a long line of sporting events in which the incentives are aligned with losing rather than winning a match. A stranger example, culled from the 1994 Shell Caribbean Cup, involved a match between Barbados and Grenada. Barbados needed to win the match by two goals to advance in the tournament. If they failed, either losing the match or winning by only one goal, their opponent Grenada would advance instead.

A very poorly-conceived though well-intentioned rule governing the tournament stipulated that any goals scored in overtime (and, by virtue of a sudden-death rule, there could only be one) would count doubly. The idea was to reward teams in close matches, so that an overtime victory would be as if a team won by two goals. This simple rule led to a very strange match.

Barbados needed to win by two goals. With less than ten minutes left in the match, Barbados led by exactly two goals and began to play very defensively. In the 83rd minute, Grenada finally scored, making the score 2-1. Barbados tried to answer but, with only three minutes remaining, was unable to score. Members of the Barbados team contemplated their options. To advance, they needed either to score one more goal in the last three minutes (winning by two), or force the game to extra time where a goal would count as if they won by two. Barbados scored on their own net, tying the game at 2-2.

This is not yet the odd part of the match. The Grenada players, initial shock abating, developed their own strategy. If they could score on Barbados in the waning minutes, they would win the match and advance. But, if they could score a goal on themselves, they would lose by one goal which was still enough to advance. For two minutes, Grenada tried to score on either goal, with Barbados players split between defending their own goal and that of their opponents!

Normal time ended in a tie and the game did go to overtime, in which Barbados scored a game winner and advanced (though was eliminated from the tournament in the next round). No penalties for the players' actions in this game were handed down since both teams were earnestly trying to win their group, and the farce was the result of silly incentives.

The role of game theory

Seemingly innocuous rules can have perverse incentives on participants. With some analysis and forethought, the implications of a policy in which overtime goals count doubly could have been anticipated. We will regularly analyze how the "rules of the game" — be they laws, business norms, or corporate policies — even when well-inentioned, may transform people's incentives, often oddly. Consider the debate over whether airlines should allow parents to carry small children in their laps for free as an alternative to purchasing a seat with proper restraints. No one can doubt that children in their own seat are safer than those held in a parent's lap, so perhaps we should listen to the experts and ban the practice? However, the extra cost of acquiring such seats may lead many parents to drive to vacation destinations instead, placing children in greater harm.

If you got this far, watch the video highlights of the Barbados / Grenada match (4 MB avi file).