05 Jun Question 1. A recent paper by Ajit Karnik, enti
Question
1. A recent paper by Ajit Karnik, entitled “Valuing Cricketeers Using Hedonic Price Models,” studied the results of an auction held by the Indian Premier League on February 20, 2008. The eight teams in the league bid on 75 players. The bids were wage offers, and the team with the highest bid acquired the rights to the player and also was required to pay that player a salary equal to the high bid.
In the study Karnik ran a regression to explain the bid price for each player. The paper reports the following results. Note that p values (not standard errors or t statistics) are reported in parentheses.
The meaning of the variables are as follows.
Finally, AUS means that the player is of Australian nationality and IND means that the player is of Indian nationality. The omitted category is all other nationalities.
a. What is the dependent variable? __________________
b. How much does a player gain, in terms of salary, if he scores 1% more of total runs scored?
__________________
c. Is this coefficient significant? Explain.
d. What kind of variable is AUS? What does its coefficient mean?
e. Are salaries for younger players higher or lower? Explain.
f. What does the R2 number mean?
g. An Indian player sues the league claiming that Indian players are discriminated against relative to Australians. Does this study provide good evidence for his claim?
h. Consider a 24 year old South African cricketer with a strike rate of 60 who scored 1% of runs and took 1% of wickets among the 75 cricketers considered (assume that RUNSAR = 0). According to the model, what will his salary be?
2. You have achieved a dream job working for the Toledo Mud Hens. Remembering what you learned in Sports Economics, you managed to estimate the demand for general admission
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