World Cup 2006 Incentives by FIFA

HESP Summer School 2006

World Cup 2006 Incentivesby FIFA

Vitaliy KobetsVira Lyubchenko


$ 230 millions

Total fund of FIFA


Dividing of fund by FIFA

• 1st place - $ 19 mln• 2nd place - $ 17,2 mln• Semi-final - $ 16,4 mln• Quarter-final - $ 8,8 mln• 1/8-final - $ 6,5 mln• Groups participants – $ 4,6 mln


Convex award structure

0

2

4

6

8

10

12

14

16

18

20

participants 1/8-final quarter-final semi-final 2nd place 1st place

Places

Aw

ard

s


Additional awards

• $ 217 thousand per win


Convex award structure with additional payments

0

5

10

15

20

25

9-16 places 5-8 places 4rd place 3rd place 2nd place 1st place

19,8680,86819,0001st place

17,8510,65117,2002nd place

17,0510,65116,4003rd place

16,8340,43416,4004rd place

9,0170,2178,8005-8 places

6,5000,0006,5009-16 places

Total payment

Additional payment

Pure payment


Executive compensation

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

38,72% 86,69% 6,34% 10,99%

Increment of payoffs

Go

als

per

co

mm

and

410,99%final - 1

0,756,34%1/2 - final

1,7586,69%1/4 - 1/2

1,12538,72%1/8 - 1/4

Goals per one teamPayoff structure


Solution of football experiment• g(0) (W1 - W2) = c’(e) – incentive constraint

• c(e) = e2 / N, N > 0 – cost of efforts for football team• c’(e) = 2e / N

• e = N g(0) (W1 - W2) / 2

• e1 = k (W1 - W2), e2 = k (W2 - W3), k = N g(0) / 2

• W3 = 4,6 mln, W2 = 6,5 mln, W1 = 8,8 mln

• e1/e2 = (8,8 – 6,5) / (6,5 – 4,6) = 1,21 (+ 21%)

• Goals N1/N2 = 1,55 (+ 55%)


Thanks for your attention!

Business

World Cup 2006 Incentives by FIFA