The minimum possible value of the "Frequency of Championships" Herfindahl-Hirschman Index Index is:
A) 0
B) 1
C) 1/n (where n = number of teams in the league).
D) Number of championships won by the "winningest team" times n.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated as the sum of the squares of the market shares (in this context, the share of championships won by each team). The minimum possible value occurs when the championships are evenly distributed among all teams, each having a 1/n share, where n is the number of teams. Squaring each team's share (1/n)^2 and summing n times gives n*(1/n)^2 = 1/n.

The Minimum Possible Value of the "Frequency of Championships" Herfindahl-Hirschman