Abstract
Each January and February, professional baseball players with three to six years of Major League service time endure a process exclusive to Major League Baseball (MLB): arbitration. Though arbitration itself is not an unfamiliar form of dispute resolution, the structure MLB employs in contract arbitration is unlike any other industry, as it incorporates an all-or-nothing result that does not allow arbitrators to “split the pie” between parties. Because of this, teams and players are not only responsible for preparation of their own arguments and filed salary, but also for anticipation of their opponent’s filed salary. The hurdle of needing to predict your opponent’s filed salary means teams and players in arbitration – whether or not they realize it – spend the off-season engaging in a microeconomic concept called Game Theory. This additional challenge changes the way both teams and players approach off-season contract negotiations, both prior to and during arbitration hearings. This paper explores (1) what Game Theory is; (2) how MLB arbitration differs from standard arbitration; (3) how Game Theory fits into the unique structure of MLB arbitration, and; (4) how teams and players can use Game Theory to strengthen the likelihood of a favorable result.
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Recommended Citation
Ansbro, R. (2025). Games Played in the Off-Season: A Teaching Case Study on Major League Baseball Arbitration and Game Theory. The COSMA Journal. https://doi.org/10.25035/cosma.02.01.08Included in
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