DP17924 Favoritism under Multiple Sources of Social Pressure
When social pressure leads to favoritism, policies might aim to reduce the bias by affecting its source. This paper shows that multiple sources may be present and telling them apart is important. To illustrate this point, we revisit the much-quoted paper by Garicano, Palacios-Huerta, and Prendergast (2005), who found that football referees help the home team by allowing the game to last longer when it is losing. This bias was attributed to conformity: social pressure stemming from home supporters in the stadium. Instead, we argue that referees may be affected by multiple sources of social pressure: the supporting crowd in the stadium as well as the host team organization. To test this hypothesis, we compile and combine new and comprehensive datasets on the top 5 European leagues over 10 seasons that cover all match events, referee decisions, team backgrounds, and referee career paths. Relying on exogenous variation in crowd size due to stadium closures during the Covid-19 pandemic, we confirm the presence of referee bias, but find that it remains unchanged despite the lack of crowds. Instead, we show that the hosting (home) team organization may have an influence on referees since the bias is twice as large when it favors an influential (top-ranked) team and is even higher when an influential team is losing at home to a minnow. However, we show that the favoritism bias of the referees is uncorrelated with career benefits. An important adverse aggregate effect relevant for policymakers is that social pressure benefiting influential teams helps maintain the ranking and makes it more difficult for smaller teams to catch up.