Minimax after Money-Max: Why Major League Baseball Players Do Not Follow Optimal Strategies

27 Pages Posted: 2 Aug 2016 Last revised: 31 Aug 2016

See all articles by Justin Choe

Justin Choe

Government of the United States of America - Foreign Agricultural Service

Jun Sung Kim

Monash University - Department of Econometrics & Business Statistics

Date Written: August 2016

Abstract

This paper investigates if professional players follow the Minimax theorem in their strategies, using Major League Baseball playoff season data. Our empirical results show that baseball players do not optimize their strategies in the sense that their sequence of chosen strategies is predictable from their previous actions. Further analysis using individual salaries and other key contract variables indicates that more experience leads to players conducting strategies following Minimax. By contrast, a higher salary decreases a player's incentive to pursue optimal strategies and brings lower performance. We find the results to have strong implications for compensation practices in various fields.

Keywords: Minimax, Baseball, Optimal Strategy, Experience, Contract

JEL Classification: C70, D01, D80

Suggested Citation

Choe, Justin and Kim, Jun Sung, Minimax after Money-Max: Why Major League Baseball Players Do Not Follow Optimal Strategies (August 2016). Available at SSRN: https://ssrn.com/abstract=2816685 or http://dx.doi.org/10.2139/ssrn.2816685

Justin Choe

Government of the United States of America - Foreign Agricultural Service ( email )

1400 Independence Ave. S.W.
Washington, DC 20250
United States

Jun Sung Kim (Contact Author)

Monash University - Department of Econometrics & Business Statistics ( email )

Wellington Road
Clayton, Victoria 3168
Australia

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