28 January 2008

The Tiger Woods Effect

My brother alerted me to a Slate article discussing research done by Jennifer Brown (Cal-Berkeley Ph.D. candidate in Economics). Her study is on the impact that a superstar (Tiger Woods) has on a peer group (PGA golfers). Some of her findings:

>> Tiger has a +1 stroke/round impact on PGA Exempt players when he is in contention (within five strokes of the lead)
>> The decline in scoring was not due to riskier strategies (e.g., going for the green on dangerous par-5's)
>> This impact goes away when he was in a slump
>> The potential prize money declines for other players due to his presence

In her job market paper, she explores how these findings could be analogous to corporate questions (e.g., impact of bringing in a rising star VP into a mix of executives, sales incentive programs for sales forces, Jack Welch's 20/70/10 program of eliminating the bottom 10% of employees and promoting the top 20%).
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