Is There Bias in Major League Baseball Arbitration? John Fizel
This chapter investigates the objectivity of arbitrators in final-offer arbitration of major league baseball. The primary purpose of the analysis is to determine if salary arbitration decisions vary among ethnic groups. In addition, this analysis examines the relationship between arbitration decisions and arbitrator's incentives to be rehired for future cases. The effects of player risk preferences and potential market biases on arbitral decisions are also explored.
Professional baseball is an excellent environment for studying arbitrator behavior for several reasons. An ample number of cases are available for analysis since baseball is involved in multiple arbitration cases each year. Baseball arbitration involves individual salary proposals rather than aggregate union and management proposals found in past studies. Baseball provides accessible information on individual performance relative to salary proposals, whereas individual performance is ignored or absent in other industries. Baseball also has high minority participation. Finally, in a survey of labor discrimination in sports, Kahn ( 1991, p. 416) reports that ". . . the relationship between collective bargaining and discrimination in sports has not yet been explored. . . . [W]e have no evidence on the impact, if any, of collective bargaining institutions such as salary arbitration . . . on racial salary differentials."
There are important reasons to believe that discrimination will be absent from baseball arbitration. First, Kahn ( 1991, p. 414) finds "little evidence of salary . . . discrimination by major league baseball," and there is no a priori reason to believe that arbitration decisions should deviate from the performance of other types of salary negotiations. Second, arbitrators are trained to objectively assess the merits of each case and would emphatically dispute any claim that personal