Tuesday, February 23, 2010

Does Behavioral Economics Help Phil Jackson to Excel as an NBA Coach?

Phil Jackson has won 10 NBA coaching titles. Now, my mom could coach MJ, Kobe and Shack to a title or 8 but let's abstract from the quality of his inputs in production of victory. In today's print version of the NY Times, Jackson admits his secret for success borrowed from the late great Red Holzman. "Jackson also adopted Holzman's system of fines for minor infractions. "what you basically call a silly fine," Jackson said. For instance a player might be assessed a $10 or $20 fine for arriving more than five minutes late to a game. To players making millions, that might seem trivial. But, Jackson has found that players are more grudging about having to pull cash out of their own pocket on the spot, than having a larger fine deducted from a paycheck, as is the usual practice. The fines also serve a team building purpose. Players can win back the money in shooting games." NY Times article

So, Richard Thaler should quit Booth's GSB and go down to the United Center and earn some real $ nudging the players to greatness. Now that Dora Costa and I are working on "the nudge", I have a great appreciation for Thaler and Sunstein's work on this topic.