Unraveling Yields Inefficient Matchings: Evidence from Post-Season College Football Bowls
Executive Summary — Many market institutions have evolved to coordinate the timing of transactions and to prevent them from taking place too early or at uncoordinated times. In the case of post-season college football games, called "bowls," during the early 1990s the determination of which teams would play in which bowls was often made with several games still remaining to be played in the regular season. Practically speaking, this meant that the teams with the best end-of-season records might not play one another, because at the time the matchings were determined it wasn't yet known which teams these would be. Over the last decade, however, this market has undergone a number of reorganizations that have delayed this matching decision until the end of the regular season. For this working paper, the authors used Nielsen rating data on television viewership and the AP sportswriters' poll of team rankings to show that, by matching later, the chance of matching the best teams has increased, and the result is an increase in television viewership. Key concepts include:
- By matching bowl games later, the quality of the matched teams has improved, the likelihood of a championship game has increased, and the television viewership of all bowls in the late-matching consortia has increased.
- This paper may provide the first direct evidence and measurement of the inefficiency due to early transaction times in a naturally occurring market.
Many markets have "unraveled" and experienced inefficient, early, dispersed transactions, and subsequently developed institutions to delay transaction timing. However, it has previously proved difficult to measure and identify the resulting efficiency gains. Prior to 1992, college football teams were matched for post-season play up to several weeks before the end of the regular season. Since 1992, the market has reorganized to postpone this matching. We show that the matching of teams affects efficiency as measured by the resulting television viewership, and the reorganization promoted more efficient matching, chiefly due to the increased ability of later matching to produce "championship" games.