Allocation of Scarce Resources: Insight from the NFL Salary Cap

  title={Allocation of Scarce Resources: Insight from the NFL Salary Cap},
  author={Richard Borghesi},
  journal={Macroeconomics: Employment},
  • R. Borghesi
  • Published 18 January 2007
  • Economics
  • Macroeconomics: Employment
We examine the effects of variations in player compensation on NFL franchise performance from 1994 to 2004. Evidence shows that team success depends significantly upon both the actual and perceived fairness of pay distribution. Specifically, proficiency relative to that of competitors is high when compensation inequity across players, whether justified or unjustified, is low. This result suggests that franchises taking a superstar-approach to personnel decisions perform worse on average, most… 
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