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- Title
Risk-Averse Team Owners and Players’ Salaries in Major League Baseball.
- Authors
Krautmann, Anthony C.
- Abstract
This article looks at the role an owner’s attitude toward risk plays in his salary bids for free agents in Major League Baseball. We show that risk-averse owners will pay a premium for consistency on the field. Our empirical results are consistent with the hypothesis that a free agent’s contract terms are negatively related to the degree of variability in his performance. To the extent that our results carry over to all players, this suggests a heretofore unrecognized factor affecting the market for talent in professional sports.
- Subjects
RISK aversion; MAJOR League Baseball Players Association; WAGES; COGNITIVE consistency
- Publication
Journal of Sports Economics, 2017, Vol 18, Issue 1, p19
- ISSN
1527-0025
- Publication type
Article
- DOI
10.1177/1527002514560577