Revenue allocation in Formula One: a pairwise comparison approach
This addresses revenue sharing in Formula One, offering a method to reduce arbitrariness in prize allocation, but it is incremental as it builds on existing pairwise comparison techniques.
The paper tackles the problem of allocating Formula One prize money among constructors by proposing a pairwise comparison model that allows tuning inequality levels and introduces a scale invariance axiom, revealing that the eigenvector method violates this condition while the row geometric mean method satisfies it.
A model is proposed to allocate Formula One World Championship prize money among the constructors. The methodology is based on pairwise comparison matrices, allows for the use of any weighting method, and makes possible to tune the level of inequality. We introduce an axiom called scale invariance, which requires the ranking of the teams to be independent of the parameter controlling inequality. The eigenvector method is revealed to violate this condition in our dataset, while the row geometric mean method always satisfies it. The revenue allocation is not influenced by the arbitrary valuation given to the race prizes in the official points scoring system of Formula One and takes the intensity of pairwise preferences into account, contrary to the standard Condorcet method. Our approach can be used to share revenues among groups when group members are ranked several times.