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Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball

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  • Daniel R. Marburger

Abstract

This article presents evidence that the preferred awards of arbitrators in final-offer arbitration (FOA) compromise between the perspectives of the bargainers. Using Major League Baseball FOA offers between 1986--2002, this study finds strong evidence that final offers (which are strategically formulated around the preferred award) are a weighted average of the player's salary in the previous season and the average free agent salary. The findings are particularly interesting because FOA was created to eliminate arbitrator compromise. (JEL J520, L830) Copyright 2004, Oxford University Press.

Suggested Citation

  • Daniel R. Marburger, 2004. "Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball," Economic Inquiry, Western Economic Association International, vol. 42(1), pages 60-68, January.
  • Handle: RePEc:oup:ecinqu:v:42:y:2004:i:1:p:60-68
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    File URL: http://hdl.handle.net/10.1093/ei/cbh044
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    Cited by:

    1. J. Richard Hill & Nicholas A. Jolly, 2014. "Negotiated Settlement Under Mlb Final-Offer Salary Arbitration System," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 533-543, April.
    2. 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.
    3. Jahn Hakes & Chad Turner, 2011. "Pay, productivity and aging in Major League Baseball," Journal of Productivity Analysis, Springer, vol. 35(1), pages 61-74, February.
    4. Turner, Chad & Hakes, Jahn Karl, 2007. "The Collective Bargaining Effects of NBA Player Productivity Dynamics," MPRA Paper 5058, University Library of Munich, Germany.
    5. Klement, Alon & Neeman, Zvika, 2011. "Private Selection and Arbitration Neutrality," Working Paper Series 4074, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.

    More about this item

    JEL classification:

    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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