New Evidence in the Study of Shirking in Major League Baseball
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This paper uses Major League Baseball data to examine the relationship between years remaining on player contracts and player performance. There is a potential for moral hazard to arise in this principal–agent relationship as the player may choose a less than optimal level of effort from the perspective of team management when the player has many guaranteed years remaining. A player fixed-effects estimation strategy, which finds a significant negative relationship between years remaining and performance, is employed. The primary contribution of this work is to show that this relationship is due to shirking. Alternative explanations for this relationship, such as teams signing improving players to multiyear contracts or players facing an adjustment process when joining a new team, are addressed. Additional evidence which is consistent with shirking behavior shows that shirking occurs on offense, not defense, and for position players, not pitchers.
The author (rpaulsen@bloomu.edu) is with the Department of Economics, Bloomsburg University of Pennsylvania, Bloomsburg, PA, USA.
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