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The Effectiveness of Incentive Mechanisms in Major League Baseball

Author

Listed:
  • Joel G. Maxcy

    (State University of New York-Cortland)

  • Rodney D. Fort

    (Washington State University)

  • Anthony C. Krautmann

    (DePaul University)

Abstract

Past work on principal-agent problems in sports does not effectively compare among players. The comparison must be made between players nearing contract negotiations and other players to detect ex ante strategic behavior (turning up performance just prior to contract negotiations) and ex post shirking (slacking off after signing the contract). The authors’ productivity measures include statistics reflecting both the player’s desire (or availability) to play as well as his performance once he enters a game. The data reject strategic performance. This suggests that mechanisms aimed at curbing strategic performance by players appear to be working well. However, pitchers with nagging injuries may be more likely to be placed on the disabled list while under long-term contracts. This may imply strategic behavior or, conversely, that clubs are choosing to protect an investment. A performance measure used to test for shirking affects some results but not the ultimate conclusions.

Suggested Citation

  • Joel G. Maxcy & Rodney D. Fort & Anthony C. Krautmann, 2002. "The Effectiveness of Incentive Mechanisms in Major League Baseball," Journal of Sports Economics, , vol. 3(3), pages 246-255, August.
  • Handle: RePEc:sae:jospec:v:3:y:2002:i:3:p:246-255
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    Cited by:

    1. repec:kap:iaecre:v:19:y:2013:i:3:p:215-232 is not listed on IDEAS
    2. Kevin J. Stiroh, 2007. "Playing For Keeps: Pay And Performance In The Nba," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 145-161, January.
    3. Heather O’Neill, 2013. "Do Major League Baseball Hitters Engage in Opportunistic Behavior?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(3), pages 215-232, August.
    4. Jahn K. Hakes & Chad Turner, 2008. "Long-Term Contracts in Major League Baseball," Working Papers 0831, International Association of Sports Economists;North American Association of Sports Economists.
    5. D Berri & R Simmons, 2007. "Race and the evaluation of signal callers in the national football league," Working Papers 591147, Lancaster University Management School, Economics Department.

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