Favoritism towards High-Status Clubs: Evidence from German Soccer

Biases in legal decision-making are difficult to identify as type II errors (wrongful acquittals) are hardly observable and type I errors (wrongful convictions) are only observed for the subsample of subsequently exonerated convicts. Our data on the first German soccer league allow us to classify each referee decision accurately as correct, type I error or type II error. The potential bias we are interested in is favoritism toward clubs with higher long-term status, proxied by the ranking in the all-time table at the beginning of each session and by membership. Higher status clubs benefit largely from fewer type II errors. By contrast, the actual strength of clubs has no impact on referee decisions. We find no difference in type I errors and suggest anticipation of the bias as a potential explanation for the difference. We investigate several mechanisms potentially underlying our results; including career concerns and social pressure (JEL J00, M51, D81, D83).