Question

It's managerial economics problem. Please expert solve well.

In 2010 some members of the Pakistan cricket team were accused of conniving
with bookmakers, if not to lose matches, then at least to instigate specific events
in the game. Does efficiency wage theory explain why such scandals are more
likely to arise for relatively low-paid sports people? In this light, what can be done
to reduce corruption in sports?

Answer 1

Efficiency wage theory essentially talks about how wages in certain markets are not market clearing. Firms pay more than the market wage because they want to increase the productivity of the workers. As per this theory, paying more increases the productivity of the workers but it is not seen in the case of Pakistani cricketers. They not only get paid monthly but also earn a certain amount per match. This has not reduced the fact that few players have been getting involved in match fixing and setting up certain events during matches.

Many believe that there is a need for stricter enforcement of punishment for those who are involved in match fixing. There is wide spread corruption in Pakistani cricket which needs to be strictly regulated.

Corruption has become a big issue in the sports industry because of the competition. People are willing to bet and fix matches to ensure they win. Corruption can be found in any area of sports and measures need to be taken to reduce it. Transparency should be brought in to the management of these sport teams and the financing of the sport itself which will reduce the corruption. There is a need for a more rigorous enforcement of the rules and ethical codes of conduct.