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Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball

Posted: 29 Feb 2008  

Daniel R. Marburger

Arkansas State University

Abstract

This article presents evidence that the preferred awards of arbitrators in final-offer arbitration (FOA) compromise between the perspectives of the bargainers. Using Major League Baseball FOA offers between 1986-2002, this study finds strong evidence that final offers (which are strategically formulated around the preferred award) are a weighted average of the player`s salary in the previous season and the average free agent salary. The findings are particularly interesting because FOA was created to eliminate arbitrator compromise. (JEL J520, L830)

Suggested Citation

Marburger, Daniel R., Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball. Economic Inquiry, Vol. 42, Issue 1, pp. 60-68, 2004. Available at SSRN: https://ssrn.com/abstract=906206

Daniel R. Marburger (Contact Author)

Arkansas State University ( email )

Box 4181
State University, AR 72467-115
United States
870-972-3416 (Phone)

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