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Salary determination in major league Baseball: A classroom exercise
Author(s) -
Estenson Paul S.
Publication year - 1994
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090150515
Subject(s) - league , salary , basketball , revenue sharing , revenue , common value auction , product (mathematics) , schedule , quality (philosophy) , economics , sports economics , advertising , business , marketing , microeconomics , labour economics , management , accounting , market economy , mathematics , archaeology , epistemology , astronomy , philosophy , physics , geometry , history
As a part of an economics course, The Economics of Major League Baseball, students were assigned the responsibilities of team owners who had to assess the quality and value of players, put a product on the market (their baseball team), pay salaries and maximize profits. The season was simulated using the Earl Weaver Baseball software and involved a schedule of 162 games for each team. The exercise was used to examine salary determination in major league baseball. The exercise was modelled as closely as possible to the actual structure of major league baseball with the clearest distinction being the acquisition of players. The owners in the experiment purchased players in the open‐outcry English auction. The results of the auction showed that salaries matched marginal revenue products and that the open auction displayed the declining price anomoly discovered to exist in real‐world auctions.