No. 72: Subjective Performance Evaluation in the Presence of a Third Party

We show that favoritism biases subjective evaluations and that the presence of a third party can mitigate this bias. Using archival data from professional ski jumping, we find that, controlling for objective performance, judges favor athletes of their own nationality and athletes who have a compatriot on the panel. We predict and provide evidence that in-person observation by an audience is associated with lower levels of favoritism compared to third-party observation via mediated communication. We contribute to the accounting literature by highlighting how in-person observation by a third party can reduce the likelihood that favoritism biases subjective evaluations.