Testing the O-Ring theory using data from the English Premier League

Abstract

This paper measures the impact of different workers in a production process dependent on their expected productivity. Using the setting of professional football, expected productivity is measured from the transfer fees paid to acquire players. It shows that the most expensive players tend to have the largest impact on the game whereas the least expensive players have little impact. The findings support superstar theories rather than O-ring theory. We also find that the optimal spending distribution is more skewed than the observed distribution suggesting some constraint in the market for superstars.