This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxer's "purse" is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption smoothing considerations alleviate this problem, savings act as further insurance and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market, and by the prevalence of "casual" boxing fans.
 

JEL Classification: L83, J41, D91

Key words: professional boxing, contracting, intertemporal decisions
 

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