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Does the Assignment of Property Rights Encourage or Discourage Shirking?

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  • Daniel R. Marburger

Abstract

Economic organization literature suggests that property rights assignment affects employee incentives to shirk. Specifically, when firms own employee property rights, the rents from increased effort accrue to the employer and encourage shirking. Applied to major league baseball (MLB), this suggests that the conversion from the reserve clause to free agency should increase player effort. However, free agency also saw an increase in the number of guaranteed multiyear contracts, which also creates shirking incentives. This article investigates the net impact of property rights assignment on shirking in MLB. An empirical model reveals that free agents with 1- and 2-year contracts outperform comparable reserve era players over the same time frame. The performance of free agents with contracts exceeding 2 years do not differ from that of comparable reserve era players over the same time period.

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  • Daniel R. Marburger, 2003. "Does the Assignment of Property Rights Encourage or Discourage Shirking?," Journal of Sports Economics, , vol. 4(1), pages 19-34, February.
  • Handle: RePEc:sae:jospec:v:4:y:2003:i:1:p:19-34
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    Cited by:

    1. Romain Gauriot & Lionel Page, 2017. "Fooled by performance randomness: over-rewarding luck," QuBE Working Papers 049, QUT Business School.
    2. 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.
    3. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.

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