March 24, 2007

Calling all the faults, and then some, should only improve his chances!

A referee, anxious about not destroying his chances with a gorgeous female basketball player by calling her fouls, but that admits to the moral hazard present if all referees did the same, asks Dear Economist for advice, Weekend, March 24. The answer he gets is that he should not collude with his fellow referee, which besides being immoral would, I guess unless they both consider her to be a public-good, not lead to a satisfactory result; or that he should just call the fouls since he doesn’t stand a chance to get her anyhow.

The last suggestion, of calling out all the faults, is precisely right, but not at all for the reason exposed by Dear Economist. Our referee should indeed call all the fouls, perhaps even those where he is only 49% sure, since by doing so he will only be creating what in the real world is known as bargaining power, and which by the way is something quite similar to what this female player derives from her looks.