Impact Aversion in Arbitrator Decisions

59 Pages Posted: 7 Feb 2014 Last revised: 20 Jan 2015

See all articles by Etan Green

Etan Green

Wharton - Operations, Information and Decisions

David Daniels

Stanford Graduate School of Business; Hong Kong University of Science & Technology (HKUST)

Date Written: January 19, 2015

Abstract

An aversion to salient mistakes leads arbitrators to make mistakes more often, even where directives are clear, incentives strong, and post-hoc evaluation perfect. We study the choices of Major League Baseball umpires, who are directed to make binary decisions according to a single, objective criterion: pitch location. Using state-of-the-art pitch location technology, we examine over one million such decisions and find that every umpire in our sample distorts his directive by avoiding the option that would more strongly change the expected outcome of the game. This impact aversion is consistent with an avoidance of public scrutiny. Umpires face criticism from the public for mistakes that disrupt the course of the game; impact-averse umpires avoid scrutiny by avoiding game-changing options that could be mistaken.

Keywords: field study, arbitration, judges, referees, decision making, impact aversion

JEL Classification: D03, D81, L83

Suggested Citation

Green, Etan and Daniels, David, Impact Aversion in Arbitrator Decisions (January 19, 2015). Available at SSRN: https://ssrn.com/abstract=2391558 or http://dx.doi.org/10.2139/ssrn.2391558

Etan Green (Contact Author)

Wharton - Operations, Information and Decisions ( email )

Philadelphia, PA 19104
United States

David Daniels

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305
United States

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

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