EXPOSING CHEATING AND CORRUPTION
Point Shaving: Corruption in NCAA Basketball
A new ﬁeld of “forensic economics” has be-gun to emerge, applying price-theoretic modelsto uncover evidence of corruption in domainspreviously outside the purview of economists.By emphasizing the incentives that yield cor-ruption, these approaches also provide insightinto how to reduce such behavior. This papercontributes to this agenda, highlighting how thestructure of gambling on college basketballyields pay-offs to gamblers and players that areboth asymmetric and nonlinear, thereby en-couraging mutually beneﬁcial effort manipula-tion through “point shaving.” Initial evidencesuggests that point shaving may be quitewidespread.The incentives for gambling-related corrup-tion derive from the structure of basketball bet-ting. To highlight a simple example, theUniversity of Pennsylvania played Harvard onMarch 5, 2005, and was widely expected to win.Rather than offering short odds on Penn win-ning the game, bookmakers offered an almosteven bet (bet $11 to win $10) on whether Pennwould win relative to a “spread.” In this exam-ple, the spread was
14.5, meaning that a beton Penn would win only if Penn won the gameby 15 or more points, while a bet on Harvardwould be successful if Harvard either won, orlost by 14 or fewer points.The incentive for corruption derives directlyfrom the asymmetric incentives of players, whocare about
the game, and gamblers,who care about whether a team beats (or
)the spread.Indeed, the example above is ripe for corrup-tion: the outcome that maximizes the joint sur-plus of the Penn players and the gambler occurswhen Penn wins the game, but fails to cover thespread (and the gambler has bet on Harvard).The contract required to induce this outcomesimply involves the gambler offering a contin-gent payment to the player, with the contin-gency being that he pays only if Penn fails tocover the spread. Given the player’s (approxi-mate) indifference over the size of the winningmargin, even small bribes may dominate hisdesire to increase the winning margin above 14points, and this, in turn, yields large proﬁts forthe gambler who has bet accordingly. The bet-ting market offers a simple technology for thegambler to commit to paying this outcome-contingent bribe: he can simply give the playerthe ticket from a $1,000 bet on his opponent notcovering the spread.Such attempts to shave the winning marginbelow the point spread are colloquially referredto as “point shaving” and form the focus of myinquiry. I start by outlining the type of corrup-tion that theory suggests will be most prevalent:
Players will be bribed
to cover the pointspread: It is easy for a player to reduce hiseffort in response to marginal ﬁnancial incen-tives. By contrast, if he usually plays at closeto maximal effort—and if the point spread isset on this assumption—then inducing evengreater effort will be impossible, or expensive.
Favorites are more likely to shave points thanare underdogs: For an underdog to commitnot to cover the spread implies committing tolosing the game, while the favorite can bothwin and not cover. Thus, the payment re-quired to motivate the underdog not to coveris typically larger than that required to inducethe favorite to shave points.
Raymond Fisman, Columbia University;Bruce Sacerdote, Dartmouth College.* The Wharton School, University of Pennsylvania,1456 Steinberg Hall-Dietrich Hall, 3620 Locust Walk, Phil-adelphia, PA 19104, and CEPR, IZA, and NBER (e-mail: email@example.com). Thanks to Steven Levitt and BetseyStevenson for helpful feedback, and to Ravi Pillai, LisaRutherford, and Bryan Elliott for exceptional researchassistance.