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Equity and arbitration in major league baseball

Author

Listed:
  • John Fizel

    (Penn State-Erie, USA)

  • Anthony C. Krautmann

    (DePaul University, USA)

  • Lawrence Hadley

    (University of Dayton, USA)

Abstract

Equity theory argues that workers examine their job performance and salaries relative to workers in comparable situations. If compensation is inequitable, workers may adjust their behavior. We test the hypothesis that an arbitration-eligible player in Major League Baseball is more likely to file for arbitration and|or proceed to an arbitration hearing if he feels he is underpaid relative to his comparison other. Bivariate probit is used to increase efficiency and correct for the sample bias in estimating decision models within the two-step arbitration process. The results indicate that equity is a significant predictor of a player's unilateral decision to file but is an insignificant determinant of going to a hearing because of offsetting responses to equity by player and owner. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • John Fizel & Anthony C. Krautmann & Lawrence Hadley, 2002. "Equity and arbitration in major league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(7), pages 427-435.
    • Handle: RePEc:wly:mgtdec:v:23:y:2002:i:7:p:427-435
    DOI: 10.1002/mde.1090
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    References listed on IDEAS

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    Cited by:

    1. Davlembayeva, Dinara & Papagiannidis, Savvas & Alamanos, Eleftherios, 2021. "Sharing economy platforms: An equity theory perspective on reciprocity and commitment," Journal of Business Research, Elsevier, vol. 127(C), pages 151-166.
    2. 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.
    3. Burak Kağan Demirtaş, 2022. "Spillover effects of the minimum wage introduction based on horizontal fairness: A lab experiment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3370-3385, December.

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