While spending the fall semester on the West Coast, I attended the MPSF Water Polo championships. (MPSF stands for Mountain Pacific Sports Federation -- a "cross-conference" conference of schools that play most sports in another association such as the PAC10, West Coast, or Big West.) I had seen water polo during the Olympics but never in person. Although the competition was very impressive in regard to the the athleticism and endurance of the players, it suffered from a terrible incentive problem leading to a foul, literally, every 5-10 seconds. Fouls near the goal are so costly that they are rarely whistled and extremely physical play from the defenders is allowed, while fouls away from the goal are not costly enough leading to huge numbers of stoppages. Call it "Soccer++" (See Modest & Not So Modest Proposals).
Why has something so glaring not been addressed? The selection of on-the-field rules is a relatively unplowed field in sports econ. We usually just assert that rules are chosen to maximize profits (or revenues). That assertion is easy enough to make but is it accurate? Are there a bunch of existing customers loyal to a given set of rules making changes likely to be unprofitable or is it something else such as league "political economy"? The NHL finally ditched the Red Line in is application of the "2-line pass" only after such an idea had long been floated. It's hard to believe that a lot of fans were tied at the hip to the Red-line, 2-line pass rule. Where rules changes require a supermajority, relatively risk averse owners are the deciding votes and may be the choke point for new ideas. Maybe it is TV contracts with relatively short lengths that make the networks unwilling to gamble on payoffs that might build over the longer term. A bunch of related questions crop up. Do leagues experiment at about the same rate or different rates, and if different, why? My guess is that sports leagues, like industries differ considerably in their willingness to experiment with altered play formats.
The biggest head scratchers for me are sports, such as water polo or soccer, where the incentive problems are glaring or sports lacking in popularity. Why not experiment? As I have written before, why doesn't the NBA try different, shorter playoff format?