Effect of Sentiment on Bitcoin Price Formation
By Brian Perry-Carrera
With the recent growth in the investment of cryptocurrencies, such as bitcoin, it has become increasingly relevant to understand what drives price formation. Given that investment in bitcoin is greatly determined by speculation, this paper seeks to find the econometric relationship between public sentiment and the price of bitcoin. After scraping over 500,000 tweets related to bitcoin, sentiment analysis was performed for each tweet and then aggregated for each day between December 1st, 2017 and December 31st, 2017. This study found that both gold futures and market volatility are negatively related to the price of bitcoin, while sentiment demonstrates a positive relationship.
Advisor: Grace Kim | JEL Codes: G12, G41, Z00
Team Payroll Versus Performance in Professional Sports: Is Increased Spending Associated with Greater Success?
by Grant Shorin
Abstract
Professional sports are a billion-dollar industry, with player salaries accounting for the largest expenditure. Comparing results between the four major North American leagues (MLB, NBA, NHL, and NFL) and examining data from 1995 through 2015, this paper seeks to answer the following question: do teams that have higher payrolls achieve greater success, as measured by their regular season, postseason, and financial performance? Multiple data visualizations highlight unique relationships across the three dimensions and between each sport, while subsequent empirical analysis supports these findings. After standardizing payroll values and using a fixed effects model to control for team-specific factors, this paper finds that higher payroll spending is associated with an increase in regular season winning percentage in all sports (but is less meaningful in the NFL), a substantial rise in the likelihood of winning the championship in the NBA and NHL, and a lower operating income in all sports.
Professor Peter Arcidiacono, Faculty Advisor
Professor Kent Kimbrough, Faculty Advisor
JEL Codes: Z2, Z20, Z23, J3
Determinants of Franchise Value in the National Basketball Association
By Matthew Van Liedekerke
Franchise values in the National Basketball Association (NBA) have more than tripled over the last five years, with the average franchise worth $1.36 billion. Using panel data on NBA franchises between 2009 and 2016, this paper finds that market, performance, star players, and brand are significant determinants of franchise value at the team level and the NBA’s television contract is the primary driver of league-wide franchise value appreciation. The valuation methodologies used in this paper predict that a franchise in Seattle would be worth $1.4 billion in 2017, which could inform the NBA’s decision on expansion.
Advisors: Connel Fullenkamp, Alison Hagy, Kent Kimbrough | JEL Codes: Z2, Z23, G32
What Gets Paid? Analyzing the Major League Baseball Contract Market
By Brian Pollack
This paper aims to assess the efficiency of the Major League Baseball contract market in the past decade, given that teams are employing more analytical approaches to player evaluation. First, analysis of team-level data reveals the most important determinants of run scoring and run prevention, respectively. Models of player contract value, controlling for player-specific variables and environmental factors, then determine what is most significantly rewarded on the free agent market. Overall, teams have identified the individual skills that are most important and compensated them accordingly, and there is evidence to suggest teams are becoming smarter about this in recent years.
Advisor: Michelle Connolly, James Roberts | JEL Codes: D7, O3, Z2
Long-Term Contracts and Predicting Performance in MLB
By Drew Goldstein
In this paper, I examine whether MLB teams are capable of using players’ past performance data to sufficiently estimate future production. The study is motivated by the recent trend by which teams have increasingly signed long-term contracts that lock in players for up to ten seasons into the future. To test this question, I define the “initial years” of a player’s career to represent a team’s available information at the time of determining whether or not to sign him. By analyzing the predictive ability these initial years have on subsequent performance statistics, I am looking to answer whether—and if so for how long—teams can justify signing players to long-term contracts with guaranteed salaries. I also compare the results of the predictive tests with actual contract data to determine the per-dollar returns on these deals for different types of contracts.
I conclude from my analysis that a player’s past performance does in fact provide sufficient insight into his future value for teams to make informed decisions at the time of signing a contract. Teams are able to better predict the future production of potential signees by examining their consistency and relative value in the initial seasons of their careers. Furthermore, the results from examining the contract data coincide with my findings on performance; teams and players arrive at salaries for long-term contracts that divide the future risk between the two parties. The returns on long-term contracts are thus demonstrated to be higher than for short-term contracts, as the overall value of longer deals compensates teams for the associated higher annual salaries.
Advisors: Peter Arcidiacono, Michelle Connolly, Duncan Thomas | JEL Codes: Z2, Z22, Z23
Increased Foreign Revenue Shares in the United States Film Industry: 2000 – 2014
By Victoria Lim
The American film industry, which has historically been driven by the domestic market, now receives an increasing proportion of its revenue from abroad (foreign share). To determine the factors influencing this trend, this paper analyzed data from 11 countries of 2,337 American films released during 2000 – 2014. Both film and country attributes were analyzed to determine each attribute’s effect on foreign share, whether its effect size has changed over time and whether each attribute has changed in frequency amongst films released. The results identified six attributes, star actors, sequels, releases in top markets, release time lag, GDP growth and a match in language, that contributed to the increase in foreign share over this period.
Advisor: James Roberts, Kent Kimbrough | JEL Codes: F40, L82, Z11 | Tagged: Foreign Share, International Box Office Revenue, Motion Picture Industry
Optimal Ordering in Sequential English Auctions: A Revenue-Comparison Model for 18th Century Art Auctions in London and Paris
By Amaan Mitha
We develop a model based on several auction parameters to test the widely held notion that in a sequential English auction, it is optimal for the seller to arrange the lots in order of decreasing value. We test this model against two datasets of 18th century auctions, one of various auctions from Paris and the other from Christie’s sales in London. We find that the Paris data support the claim, while the Christie’s data seem to refute the optimal strategy. We also find a rationale for bidders in the Christie’s auctions to alter their strategies, accounting for the discrepancy.
Advisor: Neil De Marchi | JEL Codes: D4, Z11 | Tagged: Auctions, English Auction, Lot Ordering, Optimal Auction Strategy, Sequential Auctions
A Superstar Dreaming: An economic analysis of the Aboriginal Desert Paintings Market
by Karen Francis
Abstract
Two artists each have total auction sales greater than AU$10 million in a single decade. In that same market and decade, over 20% of painters failed to sell a single painting offered at auction. There is no question that superstars dominate the Aboriginal Desert Paintings Market (ADPM) in Australia. But what contributes to the emergence of stars and superstars in this market? A gap has been left in the literature explaining superstardom; no mechanism for the emergence of stars in the visual arts has been offered. This study presents specific empirical characteristics and structural features of the ADPM which generate constraints and incentives for dealers and auction houses. The expected responsive behavior of these players is mostly confirmed by evidence presented in this study. The general picture that emerges is of a three-way tacit agreement by dealers (with government support), buyers and auction houses in promoting early success, reinforcing demonstrated market appeal by the few, and helping accelerate the shift of stars and the few real superstars from the primary to the auction market.
Professor Neil De Marchi, Faculty Advisor
JEL Codes: N27, P4, Z33
Mixed Strategy Equilibrium in Tennis Serves
by Joel Wiles
Abstract
A mixed strategy is a random choice among available strategies, with each strategy being chosen a set percentage of the time. In many games that require unpredictable play, game theory predicts that a mixed strategy equilibrium, a situation where each player uses an optimal mixed strategy, will result. Economists have tested whether people play according to the mixed strategy equilibrium in laboratory experiments with two player zero-sum games—subjects in these experiments generally do not play in accordance with game theory’s predictions. Recently, economists have published papers examining mixed strategy equilibrium play using professional sports as a natural experiment. This paper builds upon Walker and Wooders (2001), which examines mixed strategy play in the locations of serves in professional tennis matches. Walker and Wooders (2001) find that professional tennis players are closer to game theory’s predictions than subjects in laboratory settings, but still “switch their serves up” more than is consistent with game theory’s predictions. My hypothesis is that this result can be explained by a short-term timing effect where a serve that has just been hit is, ceteris paribus, less effective on the next point. I construct a model incorporating this timing effect and work out the theoretical implications of my model. I then estimate the magnitude of this timing effect and determine if optimal play under this model is consistent with the results obtained by Walker and Wooders. My conclusion is that the model accounts for a little under half of the deviation from game theory’s predictions found in the data from professional tennis matches. This suggests that professional tennis players play closer to game theory’s predictions when tested using a model designed to account for more of the complexities of tennis than the Walker and Wooders model, but they still do not play in complete accordance with those predictions.
Professor Curtis Taylor, Faculty Advisor
JEL Codes: Z20,
Understanding the Role of the Arts and Women in the Economy: The Contributions of Creative Literature.
by Danielle P. Petrilli
Abstract
This article considers the role of the arts and women in the economy from the late 19th into the early 20th century. Throughout this time period, the economics discipline did very little to address the place of either the arts or women in the modernizing economy and what little was done, on the whole, lacked complexity. This article thus begins with a brief outline of the views of the arts and women in the economy by economists during this time, but finding a greater wealth of information on these topics within creative literature, uses the work of prominent novelists as its primary research material
Professor Crauford Goodwin, Faculty Advisor
JEL Codes: B54, Z11,
