Abstract:
In this paper we are concerned with the context in which decision-makers such as judges and referees may regularly make biased and unfair decisions to preferentially treat one of the parties. We focus on cases when such favoritism is driven by social pressure – where influence is exerted by another person or group informally, as calls for conformity or directly including threats and rewards. This paper extends a well-known exercise to tell apart various sources of social pressure. We extend Garicano, Palacios-Huerta, and Prendergast (2005) who established that football referees make biased decisions in the length of stoppage time, in favor of the home team. In their argument, the motive is to satisfy the crowd in the stadium.
With substantially finer data, we confirm the existence of a referee bias towards favoring the home team in European football. Our exercise covering the five top leagues over a decade, using event level data, shows that the bias exists, albeit smaller in magnitude (15 seconds or 0.2 standard deviation of stoppage time), despite all games being televised and data publicly shared.
We also show that this bias is not, however, caused by social pressure from the home crowd. Using empty stadiums owing to Covid-19 as source of external variation in crowd size, we see zero change in this bias when there is no attendance. Instead, we find that the bias mostly comes from favoring big teams of the leagues. Home bias is estimated to be 30 seconds when the richest teams play the rest, and zero when for the opposite case. Our results are robust to a variety of specification including referee fixed effects and correcting for fairness bias.