Equity and arbitration in major league baseball

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...

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Bibliographic Details
Published in:Managerial and decision economics 2002-10, Vol.23 (7), p.427-435
Main Authors: Fizel, John, Krautmann, Anthony C., Hadley, Lawrence
Format: Article
Language:English
Subjects:
Academic achievement
Arbitration
Baseball
Baseball statistics
Coefficients
Collective bargaining
Comparable worth
Compensation
Economics
Equity
Games
Hypotheses
Job performance
Labor contracts
Management
Narcotics
Professional baseball
Salary
Sampling bias
Sports arbitration
Studies
Wages
Wages & salaries
Workers
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Summary: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.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.1090