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Arbitrator Bias and Self-Interest: Lessons from the Baseball Labor Market

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  • JOHN D. BURGER
  • STEPHEN J.K. WALTERS

Abstract

Their desire for enduring employment is commonly assumed to induce arbitrators to make fair awards. We find, however, that in major league baseball's unique institutional setting, self-interested behavior by arbitrators has led to bias against players and preservation of monopsony rents for team owners. We apply a standard model of arbitrator behavior to all 391 arbitrated cases in baseball since 1979. Under conditions that should lead to an even split in awards to teams and players, probit analysis indicates that arbitrators favor teams 61 percent of the time. Furthermore, bias against African-American and Latin-born players is even more pronounced.

Suggested Citation

  • John D. Burger & Stephen J.K. Walters, 2005. "Arbitrator Bias and Self-Interest: Lessons from the Baseball Labor Market," Journal of Labor Research, Transaction Publishers, vol. 26(2), pages 267-280, January.
    • Handle: RePEc:tra:jlabre:v:26:y:2005:i:2:p:267-280
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    Citations

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    Cited by:

    1. John W. Budd & Aaron Sojourner & Jaewoo Jung, 2017. "Are Voluntary Agreements Better? Evidence from Baseball Arbitration," ILR Review, Cornell University, ILR School, vol. 70(4), pages 865-893, August.
    2. John Burger & Stephen Walters, 2008. "Testing Fair Wage Theory," Journal of Labor Research, Springer, vol. 29(4), pages 318-332, December.
      • John D. Burger & Stephen J.K. Walters, 2006. "Testing Fair Wage Theory," Working Papers 0623, International Association of Sports Economists;North American Association of Sports Economists.
    3. Liam J. A. Lenten, 2017. "Racial discrimination in umpire voting: an (arguably) unexpected result," Applied Economics, Taylor & Francis Journals, vol. 49(37), pages 3751-3757, August.
    4. 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.
    5. John D. Burger & Stephen J. K. Walters, 2009. "Uncertain Prospects," Journal of Sports Economics, , vol. 10(5), pages 485-501, October.
    6. Hanato, Shunsuke, 2019. "Simultaneous-offers bargaining with a mediator," Games and Economic Behavior, Elsevier, vol. 117(C), pages 361-379.
    7. Nathalie Chappe & Yannick Gabuthy, 2013. "The Influence of Lawyers and Fee Arrangements on Arbitration," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 720-738, December.
    8. Jason A. Winfree & Christopher J. Molitor, 2007. "The Value of College," Journal of Sports Economics, , vol. 8(4), pages 378-393, August.
    9. Stephen J. K. Walters & Peter Allmen & Anthony Krautmann, 2017. "Risk Aversion and Wages: Evidence from the Baseball Labor Market," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(3), pages 385-397, September.

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