Are Voluntary Agreements Better? Evidence from Baseball Arbitration

42 Pages Posted: 4 Apr 2014

See all articles by John W. Budd

John W. Budd

University of Minnesota - Twin Cities - Carlson School of Management

Aaron Sojourner

University of Minnesota; IZA Institute of Labor Economics

Jaewoo Jung

Korea Labor Institute

Multiple version iconThere are 2 versions of this paper

Date Written: April 2, 2014

Abstract

This paper empirically examines the widespread belief that voluntarily negotiated agreements produce better long-run relationships than third-party imposed settlements, such as arbitrator decisions or court judgments. Two key outcomes are analyzed — subsequent player performance and the durability of club-player relationship. Major League Baseball provides a compelling setting for these analyses because individual performance is well measured, there is the possibility of relationship breakdown, and both voluntary and imposed settlements are routinely used. While the results clearly show that a third-party imposed settlement is not better than a voluntary one, the evidence in support of the widespread belief is mixed.

Keywords: dispute resolution, arbitration

JEL Classification: J52

Suggested Citation

Budd, John W. and Sojourner, Aaron J. and Jung, Jaewoo, Are Voluntary Agreements Better? Evidence from Baseball Arbitration (April 2, 2014). Available at SSRN: https://ssrn.com/abstract=2419796 or http://dx.doi.org/10.2139/ssrn.2419796

John W. Budd (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

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Aaron J. Sojourner

University of Minnesota ( email )

Carlson School of Management
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IZA Institute of Labor Economics ( email )

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Jaewoo Jung

Korea Labor Institute ( email )

9th Flr., Korea Federation of Small Business Bldg
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Seoul 150-010
Korea

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