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Arbitration in the classroom: a classroom experiment to model MLBs salary arbitration

In: Teaching Sports Economics and Using Sports to Teach Economics

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  • Amber Brown

Abstract

A knowledge of the salary arbitration process is essential for understanding how Major League Baseball wages are determined and the controversies that arise during collective bargaining. This experiment is designed to simulate the Final Offer Salary Arbitration (FOA) process. Students are assigned roles as club owners, players or arbitrators. Owners and players argue their cases to a panel of three arbitrators. Students learn the procedures of FOA in a hands-on and memorable way. The data from the experiment are collected and compared to MLB data and the discussion that follows explores the impact of arbitration on MLB wages. Other topics discussed include the role of risk preferences, monopsony power, determinants of marginal revenue product, sabermetrics, and spillover effects. Differences with NHL arbitration and emerging strategies are also considered. The experiment can be done with or without the risk assessment and is easily completed in a fifty-minute class.

Suggested Citation

  • Amber Brown, 2022. "Arbitration in the classroom: a classroom experiment to model MLBs salary arbitration," Chapters, in: Teaching Sports Economics and Using Sports to Teach Economics, chapter 14, pages 208-219, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20612_14
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    Keywords

    Economics and Finance; Teaching Methods;

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