NBA ENDGAME: DO SALARIES MATTER?

This paper estimates the association between salary dispersion and the probability that an NBA team leading two minutes before the end of a playoff game won the game.  Economic theory indicates the a priori relationship is ambiguous and the existing empirical literature finds mixed results as to the direction of the relationship.  We use game-level data from the 2012 and 2013 NBA playoffs and allow the association to be nonlinear.  Overall, our results indicate there may be U-shaped relationship between salary dispersion and win probabilities; however, the point estimates individually and jointly are not statistically significant.  Thus, we conclude there is no evidence in our sample that salary dispersion and NBA win probabilities are related.