This paper explores the connection between discrimination and entrepreneurship. To pursue this inquiry we focus on the integration of black players in Major League Baseball (MLB). MLB team owners, acting as entrepreneurs, had to weigh the benefits of integrating versus the costs of alienating consumers who had a taste for discrimination against hiring blacks. We find that the owners whose teams could profit by contending for the league pennant with the addition of black players were the ones who were willing to take the risk of integrating, although integration often stood in contrast to revealed consumer preferences. In addition to illuminating the mechanism through which integration took place, we offer a general understanding of how the costs and benefits associated with consumers' taste for discrimination can change via entrepreneurial activities.
The authors use race-level data from 2003 and 2004 to test von Allmen's hypothesis regarding the inefficiency of the NASCAR reward system, where compensation is in the form of points that are accumulated throughout a season. They define drivers as two types, skilled and unskilled. Skilled drivers are hypothesized to be less aggressive than unskilled drivers because they are more productive given the same effort. Accordingly, an unskilled driver must be more aggressive than a skilled one to gain more compensation. The authors test this assertion empirically by modeling accidents as a proxy for aggression. They find that drivers who demonstrate skill in earlier races are less likely to get into accidents in subsequent races, suggesting there is a skill-level difference among drivers.
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