Rule design in professional cycling

Via Lars Christensen, here is a combination of my favourite things:

Sprint finishes in professional cycling are fast, furious, and dangerous. A “red flag rule” seeks to moderate the chaos of these finishes, but may induce moral hazard by removing the time penalty associated with crashing. To test for moral hazard, the authors use a 2005 rule change that moved the red flag from 1 km to 3 km from the finish. Data from Europe’s Grand Tours indicate that, after the rule change, both the incidence and the size of crashes nearly doubled in the 1–3 km from the finish zone. There was no such increase in crashing rates in the 3–5 km zone.

Warning: Sports nerdiness follows.

The finding runs directly contrary to the conventional wisdom in cycling. The point of the change in the ‘red flag rule’ was to stop non-sprinters from trying to push to the front of the bunch at the end of the race. The massing of riders at the front was felt to be a recipe for disaster and the 3km change was intended to ease the congestion. The idea is that riders who aren’t involved in the sprint needn’t worry about staying ahead of crashes because they won’t be penalised time if they are stuck behind one. By changing the incentives the governing body intended to resolve a prisoner’s dilemma that was causing big crashes at the end of sprint stages.

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Wearing a helmet whenever riding a bicycle, in-line skates, or a skateboard should be an automatic habit. Helmets should fit properly on your child’s head and also be fastened correctly. A properly-fastened and fitting helmet does not move around on the head.

The authors understand all that and suggest that the countervailing factor is that it insured riders against risk, which caused them to ride more dangerously near the finish. That’s a difficult explanation to accept because of the diverse nature of a cycling bunch. The sprinters are the ones most likely to take on risk to win the race, but they care little about losing time in a crash so their incentives are unchanged. The rest of the bunch has little chance of winning but some care about the time loss. Since there is no longer a cost to being stuck behind a crash they have an incentive to reduce their risk exposure. I struggle to see a good causal explanation for the results in the paper, although their magnitude is quite striking.