In economics, the principal-agent problem occurs when one person (the “agent”) is able to make decisions and/or take actions on behalf of another person (the “principal”). The problem arises where the two parties have different interests and asymmetric information, such that the principal cannot directly ensure that the agent is always acting in their (the principal's) best interest.
Previous work by Purcell (2009) examined the presence of the principal-agent problem in professional basketball. The findings of the study suggest that imperfect competition between managers and players, coupled with long-term highly lucrative contracts, altered player’s effort over the course of their contract. Specifically, player effort is reduced the year after signing a long-term contract. This post examines whether similar effects may be evident in college basketball.
In recent years, few college basketball players have generated as much interest and excitement as Duke University’s Zion Williamson. The 6’7, 285 pound forward is widely considered a lock for the number one overall pick in the 2019 NBA Draft with comparisons being drawn to NBA greats Lebron James, Shawn Kemp and ‘Sir’ Charles Barkley.
Before the beginning of the 2019 college season, Williamson was projected to be a top 5 NBA Draft pick. However, there were worries over his weight and how this would impact his ability to get up and down the court and avoid injuries. Furthermore, many commentators suggested that he wasn’t even the best player on his team, with that honour going to RJ Barrett. This provided an incentive for Williamson to maximise his effort, learn from legendary Duke coach Mike Krzyzewski (‘Coach K’) and improve his performance in order to climb up the rankings, thus maximising the interest of both Coach K (principle) and Williamson (agent).
However, now that he is the consensus number one overall pick, which is rewarded with lucrative long-term contracts and sponsorship deals, there may be an incentive for Williamson to rest up in order to avoid injury and protect his future earnings. Six-time NBA champion Scotty Pippen said recently on ESPN “I think he’s locked up the biggest shoe deal, I think he’s definitely going to be the No. 1 pick, I think he’s done enough for college basketball, that it’s more about him personally” Pippen went on “I would shut it down. I would stop playing because I feel he could risk a major injury that could really hurt his career”.
These interests will obviously not be shared by his coach who needs Williamson to play in order maximise his chances of winning his sixth NCAA Championship. Thus, according to the principal-agent problem, Coach K needs to incentivise Williamson in order to align the interest of the agent with those of the principle. However, judging by recent comments this may have already happened with Williamson stating “I can't just stop playing. I'd be letting my teammates down, I'd be letting Coach K down, I'd be letting a lot of people down. If I wanted to sit out, I wouldn't have went to college. I came to Duke to play."