Download Free Final Offer Arbitration And Major League Baseball Book in PDF and EPUB Free Download. You can read online Final Offer Arbitration And Major League Baseball and write the review.

Final offer arbitration is a conflict resolution device that has been the subject of extensive theoretical and empirical research during the last 30 years. Data from 1985 to 2008 Major League Baseball salary negotiations are used to answer three questions concerning bargaining in the presence of final offer arbitration. First, what explains the player's decision to threaten his team with final offer arbitration? In particular, does previous salary inequity truly predict arbitration filing as reported by Fizel, Krautmann, and Hadley (2002)? I find that previous salary inequity is unrelated to the threat of filing for arbitration except for the specific time period used by Fizel, Krautmann, and Hadley. Second, what factors underlie both parties' final offers and their initial disagreement? Specifically, does relative performance significantly impact the players' salary demands and team offers? I find that relative performance is important to offer formation and initial disagreement, though the results are sensitive to the time period under analysis and the type of relative comparison that is made. Finally, what factors predict negotiation impasse that results in arbitration? In particular, does increased offer aggressiveness always imply that a private resolution is less likely as found by Farmer, Pecorino, and Stango (2004)? Furthermore, is the definition of offer aggressiveness important to this conclusion? Fizel (1996), Farmer, Pecorino, and Stango (2004), and Hadley and Ruggiero (2006) each propose a different technique of estimating offer aggressiveness. I find that disputes containing aggressive offers were more likely to result in bargaining impasse for salary negotiations prior to 2003. In addition, the definition of offer aggression is important.
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).
This dissertation consists of three essays exploring the labor market in Major League Baseball (MLB), as well as the negotiation environment for arbitration eligible players. Chapter 1 will show that the distribution of individual labor productivity has a significant effect on overall firm output. Results indicate that a firm with heterogeneous workers should consider not only the sum of individual contributions, but also how individual contributions are allocated, as increased concentration reduces overall output. Traditionally, salary dispersion acts as a proxy for ability dispersion. Past literature indicates that workers respond to disparity, though the literature is conflicting as to the direction of this response. In all cases, however, using salary as a proxy for worker production over-simplifies the firm's decision-making process. This chapter uses data from MLB to measure productivity concentration directly, independent of wage concentration. If workers act as complements to one another then the concentration of productivity will influence overall output in a way that is unrelated to the distribution of salaries. This analysis allows for workers' behavioral response to wage, and the productivity effects of heterogeneous individual production levels, to be evaluated separately. The analysis could extend to any industry in which workers act as a team contributing a portion of a final product. These findings are particularly useful for industries, like MLB, in which varying degrees of monopsonistic power make wage a poor proxy for productivity.\\ Chapter 2 discusses Final Offer Interest Arbitration (FOA), a bargaining mechanism designed to promote private negotiation and, when necessary, resolve a negotiation impasse without a work stoppage. If parties cannot settle on mutually acceptable terms, they bring their proposed terms to an arbitrator. The arbitrator then rules in favor of one party. In a Final Offer system, the winning party's terms become the binding terms of the agreement. In order for FOA to be an effective mechanism, it should promote bargaining, meaning it is used relatively infrequently and, when used, its outcomes should resemble privately negotiated terms. Traditionally, both parties are given equal power to select the arbitrator who will hear the case. This veto power during the selection process should weed out any calculable or predicable favoring of one party over another, so an FOA system should not yield significantly different settlements from those that do not go to arbitration and are instead privately negotiated. This chapter explores the use of FOA in Major League Baseball. Different players face arbitration eligibility at points during their career, allowing for a side-by-side view of settlements with and without an FOA mechanism. Results indicate that FOA has succeeded in promoting bargaining, but that a bias against players lingers even as uncertainty dwindles. Chapter 3 is meant to complement chapter 2 by further exploring FOA. Arbitrators must maintain a degree of unpredictability in order to promote private negotiation. However, they also must be predictable enough that parties expect a "high-quality" ruling, meaning the outcome falls within a range that parties believe reflects privately negotiated decisions. I use data from Major League Baseball (MLB) and the Wisconsin Employment Relations Commission (WERC) to explore the way teams learn from past decisions to reduce uncertainty surrounding arbitrator decisions.
This paper provides a detailed analysis of negotiated salaries under Major League Baseball's final-offer arbitration process using data from the 2007-2010 seasons. There is a wage premium of 25% for hitters and 14% for pitchers filing for arbitration. Interestingly, there is an additional premium for exchanging offers for hitters but not for pitchers. The additional premium in salary for hitters who exchange offers with their clubs amounts to 7%.