IDEAS home Printed from https://ideas.repec.org/a/sae/jospec/v3y2002i3p246-255.html
   My bibliography  Save this article

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
    DOI: 10.1177/1527002502003003002
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1527002502003003002
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1527002502003003002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    2. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    3. Blass, Asher A, 1992. "Does the Baseball Labor Market Contradict the Human Capital Model of Investment?," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 261-268, May.
    4. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miguel-Ángel Gómez & Carlos Lago & María-Teresa Gómez & Philip Furley, 2019. "Analysis of elite soccer players’ performance before and after signing a new contract," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-14, January.
    2. David J. Berri & Rob Simmons, 2009. "Race and the Evaluation of Signal Callers in the National Football League," Journal of Sports Economics, , vol. 10(1), pages 23-43, February.
    3. Quinn Keefer, 2021. "Sunk costs in the NBA: the salary cap and free agents," Empirical Economics, Springer, vol. 61(6), pages 3445-3478, December.
    4. David J. Berri & John Charles Bradbury, 2010. "Working in the Land of the Metricians," Journal of Sports Economics, , vol. 11(1), pages 29-47, February.
    5. Fumarco, Luca & Longley, Neil & Palermo, Alberto & Rossi, Giambattista, 2024. "Strategic Behaviours in a Labour Market with Mobility-Restricting Contractual Provisions: Evidence from the National Hockey League," IZA Discussion Papers 16836, Institute of Labor Economics (IZA).
    6. Anthony C. Krautmann & John L. Solow, 2009. "The Dynamics of Performance Over the Duration of Major League Baseball Long-Term Contracts," Journal of Sports Economics, , vol. 10(1), pages 6-22, February.
    7. Richard J. Paulsen, 2018. "Contract Options and Performance: The Case of Major League Baseball," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(4), pages 379-388, December.
    8. 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.
    9. Joshua M. Congdon-Hohman & Jonathan A. Lanning, 2018. "Beyond Moneyball," Journal of Sports Economics, , vol. 19(7), pages 1046-1061, October.
    10. Joshua Congdon-Hohman & Jonathan A. Lanning, 2013. "Workers' Responses to Incentives: The Case of Pending MLB Free Agents," Working Papers 1304, College of the Holy Cross, Department of Economics.
    11. Anthony C. Krautmann & Thomas D. Donley, 2009. "Shirking in Major League Baseball Revisited," Journal of Sports Economics, , vol. 10(3), pages 292-304, June.
    12. Stephen T. Easton & Duane W. Rockerbie, 2005. "Overtime! Rules and Incentives in the National Hockey League," Journal of Sports Economics, , vol. 6(2), pages 178-202, May.
    13. Babatunde Buraimo & Bernd Frick & Michael Hickfang & Rob Simmons, 2015. "The Economics of Long-term Contracts in the Footballers' Labour Market," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 8-24, February.
    14. 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.
    15. Steven Salaga & Brian M. Mills & Scott Tainsky, 2020. "Employer-Assigned Workload and Human Capital Deterioration: Evidence From the National Football League," Journal of Sports Economics, , vol. 21(6), pages 628-659, August.
    16. Joshua D. Pitts & Brent A. Evans, 2023. "New contracts and dismissal threats from highly drafted rookies: What motivates NFL quarterbacks?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 4-16, January.
    17. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laura Poppo & Keith Weigelt, 2000. "A Test of the Resource‐Based Model Using Baseball Free Agents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 585-614, December.
    2. Dietl, Helmut M. & Duschl, Tobias & Lang, Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-30, August.
    3. Anthony C. Krautmann & Thomas D. Donley, 2009. "Shirking in Major League Baseball Revisited," Journal of Sports Economics, , vol. 10(3), pages 292-304, June.
    4. Stacey L. Brook, 2021. "A Comparison of NCAA FBS Head Coaches Salary Determination From New and Modified Contracts," Journal of Sports Economics, , vol. 22(5), pages 491-513, June.
    5. Epstien, Gerald & Gintis, Herbert, 1989. "International Capital Markets and the Limits of National Economic Policy," WIDER Working Papers 295606, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    6. Kerry L. Papps, 2020. "Sports at the vanguard of labor market policy," IZA World of Labor, Institute of Labor Economics (IZA), pages 481-481, October.
    7. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    8. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    9. Rachel Scarfe & Carl Singleton & Adesola Sunmoni & Paul Telemo, 2024. "The age‐wage‐productivity puzzle: Evidence from the careers of top earners," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 584-606, April.
    10. Furmaco, L. & Longley, N. & Palermo, A. & Rossi, G., 2021. "Employees’ Performance Variation over Fixed-Term Contracts - Evidence from the National Hockey League," Working Papers 2107, Tulane University, Department of Economics.
    11. John Brehm & Scott Gates, 1994. "When Supervision Fails to Induce Compliance," Journal of Theoretical Politics, , vol. 6(3), pages 323-343, July.
    12. Patrick Bolton & David S. Scharfstein, 1998. "Corporate Finance, the Theory of the Firm, and Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 95-114, Fall.
    13. Roumasset, James A., 1994. "Explaining Diversity In Agricultural Organization: An Agency Perspective," Bulletins 12982, University of Minnesota, Economic Development Center.
    14. Mikko Ketokivi & Joseph T. Mahoney, 2020. "Transaction Cost Economics As a Theory of Supply Chain Efficiency," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 1011-1031, April.
    15. Kirsten Foss & Nicolai J. Foss, 2003. "Authority in the Context of Distributed Knowledge," DRUID Working Papers 03-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    16. Henderson, James & Leleux, Benoit & White, Ian, 2006. "Service-for-equity arrangements: Untangling motives and conflicts," Journal of Business Venturing, Elsevier, vol. 21(6), pages 886-909, November.
    17. Hearn, Bruce, 2014. "Institutional impact on the expropriation of private benefits of control in North Africa," Research in International Business and Finance, Elsevier, vol. 30(C), pages 1-23.
    18. Anthony C. Krautmann & Elizabeth Gustafson & Lawrence Hadley, 2003. "A Note on the Structural Stability of Salary Equations," Journal of Sports Economics, , vol. 4(1), pages 56-63, February.
    19. John G. Sessions & Nikolaos Theodoropoulos, 2014. "Tenure, Wage Profiles and Monitoring," Research in Labor Economics, in: New Analyses of Worker Well-Being, volume 38, pages 105-162, Emerald Group Publishing Limited.
    20. Christoph Feichter & Isabella Grabner, 2020. "Empirische Forschung zu Management Control – Ein Überblick und neue Trends [Empirical Management Control Reserach—An Overview and Future Directions]," Schmalenbach Journal of Business Research, Springer, vol. 72(2), pages 149-181, June.
    21. Awaya, Yu & Do, Jihwan, 2022. "Incentives under equal-pay constraint and subjective peer evaluation," Games and Economic Behavior, Elsevier, vol. 135(C), pages 41-59.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jospec:v:3:y:2002:i:3:p:246-255. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.