Abstract
Using real-life sports data of Major League Baseball, this paper investigates whether professional players follow the minimax theorem in their strategies. Our empirical results using the 2010 regular-season data show that baseball players do not optimize their strategies: there is a significant difference in their payoffs across strategies, and the sequence of their strategy choices is predictable from their previous actions. Further analysis using individual salaries and key contract variables indicates that a higher salary has a positive impact on following minimax strategies in the regular season. By contrast, a longer contract decreases a player’s incentive to pursue optimal strategies in the postseason. These results have important implications for compensation practices in various fields.
| Original language | English |
|---|---|
| Pages (from-to) | 2591-2605 |
| Number of pages | 15 |
| Journal | Applied Economics |
| Volume | 51 |
| Issue number | 24 |
| DOIs | |
| Publication status | Published - 2019 |
Keywords
- baseball
- contract length
- Minimax
- optimal strategy
- salary