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An Analysis of Final Offers Chosen in Baseball's Arbitration System


  • Phillip A. Miller

    (University of Missouri-Columbia)


This article describes a model of final offer arbitration, like that used in major league baseball, in which two stages of wage bargaining exist between a risk-averse firm and a risk-averse employee. In the first stage, the negotiators set final offers. In the second stage, the negotiators bargain cooperatively. Using data from major league baseball, it is found that in cases involving position players and relief pitchers, negotiators set final offers in a risk- neutral manner. In cases involving starting pitchers, negotiators bargain in a non-risk-neutral manner.

Suggested Citation

  • Phillip A. Miller, 2000. "An Analysis of Final Offers Chosen in Baseball's Arbitration System," Journal of Sports Economics, , vol. 1(1), pages 39-55, February.
  • Handle: RePEc:sae:jospec:v:1:y:2000:i:1:p:39-55

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    Cited by:

    1. John Fizel & Anthony C. Krautmann & Lawrence Hadley, 2002. "Equity and arbitration in major league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(7), pages 427-435.

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