Skill, Luck, And The Battle Of The Sexes

Outcomes are a function of luck and skill. Differentiating between them is challenging, however, despite their distinction being important for performance evaluation, compensation, incentives, and resource allocation. In sports, this distinction matters critically and has implications for entertainment, rule changes, and who wins and why. We investigate, identify, and measure the role of skill versus luck in tennis using a parsimonious hierarchical structural model that can answer a rich set of questions. Because skill accumulates with scale while luck partially cancels out, three set matches are more prone to luck than five set matches – begging the question: are Serena Williams’ 23 grand slams more impressive than Novak Djokovic’s 24? There are also second and third order effects – such as having to face tougher opponents later in five-set tournaments and seeding, which are also functions of luck, that differs for men and women. We attempt to answer questions like these and conduct counterfactual analysis, such as how many slams would Serena have won if best out of five? How many would Venus Williams have won if Serena wasn’t present? Which men’s and women’s players “exceeded” (lucky) or “underperformed” (unlucky) their skill level? Given the precision of the model, we also identify multiple dimensions of skill (serving, returning, surface, stamina) and multiple sources of luck (point, match draw, ranking/seeding). The model matches data and betting odds, and can be used to infer distributions in winning, earnings, rankings, and career dynamics. Our framework can potentially explore other aspects of performance such as momentum, clutch, and choking, as well as the expected impact of rule changes in tennis and how each of these might differ across the men’s and women’s game.

Tobias "Toby" Moskowitz currently holds the Dean Takahashi ’80 B.A., ’83 M.P.P.M. Chaired Professorship in Finance at Yale University at the Yale School of Management, for which he is the inaugural chair holder (in 2016). He was previously the Fama Family Professor of Finance at the University of Chicago Booth School of Business, where he taught from 1998 to 2016. Professor Moskowitz was recognized by the American Finance Association with its 2007 Fischer Black Prize, which is awarded biennially to the top finance scholar in the world under the age of 40 in years when one is deemed deserving.

The award cited his "ingenious and careful use of newly available data to address fundamental questions in finance." Moskowitz also won the Ewing Marion Kauffman Medal in 2012 for the top research in entrepreneurship for scholars under the age of 40. His research papers have received numerous awards, including the Smith-Breeden Prize for the best paper published in the Journal of Finance, the Brattle Prize for the best non-asset pricing paper published in the Journal of Finance, two Fama-DFA Prizes for the best paper published in the Journal of Financial Economics, two Michael Brennan Awards for the best paper published in the Review of Financial Studies, the Swiss Finance Institute Outstanding Paper Award, and two Bernstein-Fabozzi and Jacobs-Levy Awards for the best paper in the Journal of Portfolio Management (most recently in 2024), two Harry Markowitz prizes for the best paper published in the Journal of Investment Management, the Whitebox Prize for best financial research, and multiple Q-Group Best Paper Awards.

His work has been cited in the Wall Street Journal, the New York Times, Financial Times, US News and World Report, Money magazine, and a 2005 speech by then Federal Reserve Chairman Alan Greenspan. He has also appeared on CNBC's Closing Bell and Squawk Box, CNN, FOX, Bloomberg, as well as ESPN, Sport Illustrated, HBO's Real Sports with Bryant Gumbel.

Professor Moskowitz serves as a research associate for the National Bureau of Economic Research and is a former editor of the Review of Financial Studies, an associate editor of the Journal of Finance, and an associate editor at the Journal of Financial Economics. His research studies financial markets and investments, including the behavior of prices and investors. He has explored topics as diverse as momentum in stock returns, biases in investment portfolios, the return to private business ownership, financial contracting in commercial real estate, mutual and hedge fund performance, the political economy of financial regulation, and the economics of sports. He has presented his research at many academic, corporate, and government institutions worldwide. Professor Moskowitz spent the 2007-2008 and 2014-2015 academic years on leave at AQR Capital Management, LLC a hedge fund in Greenwich, CT, with which he has an ongoing consulting relationship. He was made a principal at the firm in 2015, where he contributes to research on asset pricing and investments for AQR’s domestic and international investment strategies.

In collaboration with David F. Swensen, the CIO of the Yale Investments Office, Professor Moskowitz founded the Yale School of Management’s Master’s program in Asset Management, for which he serves as the Academic Director and whose inaugural class will graduate in 2022. The one-year program seeks to train Master’s students in the theory and practice of asset management, with a curriculum that is tailored for that aim. In 2011, he wrote the New York Times best-seller "Scorecasting: The Hidden Influences Behind How Sports are Played and Games are Won," (Crown Archetype, Random House) co-authored with L. Jon Wertheim of Sports Illustrated, that uses economic principles to explain the hidden side of sports. He and Wertheim are also authors of the children’s book “The Rookie Bookie” in the Fall of 2015 (Little Brown). Professor Moskowitz currently serves on the board of trustees of the Commonfund, where he is the chair of the audit and risk committee. He previously served as a board member for Ariel Capital (2012-2015), the Center for Research in Security Prices at the University of Chicago (2005-2015), and Mercer Global Advisors.

Born in West Lafayette, IN, Moskowitz earned a bachelor's degree in industrial management and industrial engineering (with distinction) in 1993 from Purdue University, a master's degree in management from Purdue in 1994, and a Ph.D. in finance from UCLA in 1998.