Are Voluntary Agreements Better? Evidence from Baseball Arbitration

44 Pages Posted: 19 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

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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, negotiation, salary, sports, baseball

JEL Classification: J52, M12, M5

Suggested Citation

Budd, John W. and Sojourner, Aaron J. and Jung, Jaewoo, Are Voluntary Agreements Better? Evidence from Baseball Arbitration. IZA Discussion Paper No. 8098. Available at SSRN: https://ssrn.com/abstract=2426852

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 )

P.O. Box 7240
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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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