Imagine Steve Jobs saying the iPhone is useless or Bill Gates recommending that Microsoft Office be thrown out the window.
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Such a bizarre situation exists in the world’s most popular sport, association football (or soccer). And those who saw the nerve-wrecking A-League grand final clash between Sydney FC and Melbourne Victory on Sunday probably sensed that the problem at hand is the penalty shoot-out.

The parallels between the economy and sport are stronger than they seem, and economic research can be useful in both arenas by identifying “welfare-improving” rules and policies.

In 2006, FIFA’s then president, Sepp Blatter, said: “Football World Cup, it is a passion, and when the match goes into extra time, it’s a drama. But when it comes to penalty kicks, it’s a tragedy.”

Blatter’s statement followed the 2006 World Cup final, which featured arch-rivals Italy and France and was decided by a penalty shoot-out. His statement was motivated by the large number of important matches decided in this cruel lottery.

What’s the problem? Blatter’s primary issue was not just the randomness of the shoot-out but that it doesn’t provide a team contest. It also puts extreme pressure on individual penalty takers, who may suffer major psychological trauma if they miss. One may recall the agony and tears of players such as England’s David Beckham, France’s David Trezeguet, Chelsea’s John Terry and, most recently, Melbourne Victory’s Carl Valeri and Marco Rojas, who missed the penalty kicks in Sunday’s grand final.

FIFA’s efforts to reduce the reliance on penalty shoot-outs resulted in adopting the so-called “golden goal” between 1993 and 2002, which meant “sudden death” for the team that first conceded a goal in extra time. The rule tried to ensure that there was more attacking play and thus fewer matches decided in a shoot-out.

The fiasco of this rule did not surprise economists, because they pay attention to the effects of various policies on incentives of economic subjects. It was clear to them that the golden goal not only increased the “reward” for scoring a goal – and therefore incentives for players to attack in extra time – but it also increased the “punishment” for conceding a goal – and therefore incentives to defend. As it turned out, the latter effect was stronger due to a phenomenon known as “loss aversion”, a theory for which Daniel Kahneman and Amos Tversky received the Nobel prize in economics in 2002. When it became apparent that the golden goal was counterproductive and led to fewer goals in extra time, FIFA abandoned it. How can economics help?

Are there alternatives to the penalty shoot-out that would eliminate the above shortcomings and alleviate the football tragedy? This is where economic research can help, by answering the following question: what would happen if we swapped the extra time and penalty shoot-out around? If, after a tie in regulation time (90 minutes), the shoot-out first took place, and only then did the 30-minute extra time follow? Under this new sequencing the team that scored the most goals in extra time would win – regardless of the outcome of the preceding shoot-out. Only in the event that the extra time ended in a draw would the shoot-out result become relevant and determine the winner of the game.

The positive psychological effects of this change are obvious. The team losing the shoot-out would have an opportunity to sway the match in its favour in the subsequent extra time. If it failed, it would be perceived as a failure of the team, not the individual who missed the 12-yard kick. This would naturally reduce their stress and stigmatisation.

Other effects of the proposed rule change are quantified in my study (with colleagues Liam Lenten from La Trobe University and Petr Stehl??k from University of West Bohemia) published in the Journal of Sports Economics. Our econometric analysis of a large number of football matches shows the proposed move of penalties before extra time would strongly encourage attacking play and increase scoring in extra time. According to our estimates, in competitions such as the World Cup or the European Champions League final, the rule would increase the likelihood of a goal in extra time by 45 to 60 per cent. It would therefore reduce the proportion of tedious games with scoreless extra time by half, from 50 to 25 per cent. It’s because one team would always have an incentive to attack – unlike under the status quo, whereby both teams often defend and wait for the shoot-out.

Our study shows the exact boost in extra-time scoring would depend on many factors, such as the number of goals in regulation time, tournament round, home-ground advantage and relative strength of the teams (which we measure by bookmakers’ odds). Our regression models suggest, for example, that the probability of a goal being scored in extra-time of a World Cup quarterfinal, between two equally favoured opponents tied nil all after regulation time, would increase from the current 35.2 to 61.9 per cent. If this same type of match finished one all after the regulation 90 minutes, the scoring probability would increase from 46 to 72 per cent under the new rule.

Therefore, we hope that, after the successful launch of the goal-line technology and promising trials of video-refereeing, FIFA officials decide to test other football innovations, including the proposed swap of extra time and penalties. It would allow economic research to prevent many future soccer and personal tragedies.

Dr Jan Libich is a senior lecturer in macroeconomics at La Trobe University.

This story Administrator ready to work first appeared on Nanjing Night Net.