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Arbitrator Bias and Self-Interest: Lessons from the Baseball Labor Market

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  • JOHN D. BURGER
  • STEPHEN J.K. WALTERS

Abstract

Their desire for enduring employment is commonly assumed to induce arbitrators to make fair awards. We find, however, that in major league baseball's unique institutional setting, self-interested behavior by arbitrators has led to bias against players and preservation of monopsony rents for team owners. We apply a standard model of arbitrator behavior to all 391 arbitrated cases in baseball since 1979. Under conditions that should lead to an even split in awards to teams and players, probit analysis indicates that arbitrators favor teams 61 percent of the time. Furthermore, bias against African-American and Latin-born players is even more pronounced.

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Bibliographic Info

Article provided by Transaction Publishers in its journal Journal of Labor Research.

Volume (Year): 26 (2005)
Issue (Month): 2 (January)
Pages: 267-280

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Handle: RePEc:tra:jlabre:v:26:y:2005:i:2:p:267-280

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Web page: http://transactionpub.metapress.com/link.asp?target=journal&id=110581

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Cited by:
  1. John D. Burger & Stephen J.K. Walters, 2006. "Testing Fair Wage Theory," Working Papers 0623, International Association of Sports Economists & North American Association of Sports Economists.
  2. Budd, John W. & Sojourner, Aaron J. & Jung, Jaewoo, 2014. "Are Voluntary Agreements Better? Evidence from Baseball Arbitration," IZA Discussion Papers 8098, Institute for the Study of Labor (IZA).
  3. John D. Burger & Richard D. Grayson & Stephen J.K. Walters, 2006. "Initial Public Offerings of Ballplayers," Working Papers 0624, International Association of Sports Economists & North American Association of Sports Economists.

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