A hedonic model of player wage determination from the Indian Premier League auction: Further evidence1

A range of cross-sectional models are estimated with a view to establishing the factors that determine the valuation of professional athletes in a highly-specialised sport, with an application to cricket's Indian Premier League (IPL). We distinguish between personal characteristic and playing ability factors, and with respect to the former, between ability in different forms of the sport. We find a number of interpretable variables that have explanatory power over auction values, while decomposition according to batting and bowling specialisations produces very different results depending on the use of either Test or One-Day International (ODI) variables. There is also possible evidence of inefficient bidding, insomuch that overbidding was somewhat correlated with players with higher realised values.

Research highlights
► Hedonic price models allow estimation of ‘fair values’ of professional cricketers in a unique open-auction framework, allowing inferences on bidding patterns.
► Players from India, with an X-factor and previous Twenty20 experience attracted systematic premiums in the auction.
► There is evidence of an economic ‘superstar’ effect—overbidding for star players and underbidding for lesser players.