Arbitrator Compromise in Final Offer Arbitration: Evidence from Major League Baseball
Daniel R. Marburger
Arkansas State University
Economic Inquiry, Vol. 42, Issue 1, pp. 60-68, 2004
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)
Date posted: February 29, 2008
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