Equilibrium Explanation of Bargaining and Arbitration in Major League Baseball
AbstractArbitration in Major League Baseball can be explained by baseball clubs "lack of information regarding their players" risk attitudes. Different player risk attitudes yield different contract zones of potential settlements. Profit-maximizing baseball clubs must sacrifice some potential settlements to minimize their expected payments to players. Mixed strategies in arbitration offers by players and settlement offers by clubs yield an equilibrium in a game with asymmetric information. The history of arbitration outcomes is explained by the predicted selection of cases for arbitration.
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Bibliographic InfoArticle provided by in its journal Journal of Sports Economics.
Volume (Year): 2 (2001)
Issue (Month): 1 (February)
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Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
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