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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. repec:vuw:vuwscr:19179 is not listed on IDEAS
    2. 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.
    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. Kenneth H. Brown & Lisa K. Jepsen, 2009. "The Impact of Team Revenues on MLB Salaries," Journal of Sports Economics, , vol. 10(2), pages 192-203, April.
    5. Klement, Alon & Neeman, Zvika, 2011. "Private Selection and Arbitration Neutrality," Working Paper Series 19179, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. 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.
    7. 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.
    8. John D. Burger & Stephen J. K. Walters, 2009. "Uncertain Prospects," Journal of Sports Economics, , vol. 10(5), pages 485-501, October.
    9. Henrickson, Kevin E. & Langrill, Ryan, 2013. "Spatial Econometrics In Nonspatial Settings," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 9(1-2), January.
    10. Lawrence Hadley & John Ruggiero, 2006. "Final-offer arbitration in major league baseball: A nonparametric analysis," Annals of Operations Research, Springer, vol. 145(1), pages 201-209, July.
    11. Klement, Alon & Neeman, Zvika, 2012. "Does Information about Arbitrators’Win/Loss Ratios Improve Their Accuracy?," Foerder Institute for Economic Research Working Papers 275786, Tel-Aviv University > Foerder Institute for Economic Research.
    12. Turner, Chad & Hakes, Jahn Karl, 2007. "The Collective Bargaining Effects of NBA Player Productivity Dynamics," MPRA Paper 5058, University Library of Munich, Germany.

    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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