annotated-ECON%204830%20PS%203%20%283%29

pdf

School

Ohio State University *

*We aren’t endorsed by this school

Course

4830

Subject

Economics

Date

Feb 20, 2024

Type

pdf

Pages

Uploaded by PrivateStarling4012

ECON 4830 Problem Set #3 1. 2. 3. In final offer salary arbitration in Major League Baseball, the Nash Equilibrium is reached when both the player and the team submit final salary offers that they believe accurately represent the player's value. Neither party benefits from deviating from this strategy, as doing so could result in a less favorable outcome. If a player submits an unrealistically high bid, the arbitrator may choose the team's offer, and if the team submits an unrealistically low bid, the arbitrator may choose the player's offer. Both parties, therefore, should strategically choose offers that align with their perceived value in order to ensure a balanced outcome through the process. 4. If MLB players, who are more risk-averse than teams, are settling for less than their perceived value in arbitration cases, it could be due to uncertainty introduced by an unpredictable arbitrator. Risk-averse players do not want to face the unpredictability associated with arbitration outcomes. These outcomes are unpredictable due to that they are influenced by various factors such as performance metrics and comparable player salaries. Players that prioritize certainty, may settle for settlements below their perceived value rather than risk an unfavorable decision. However, teams that are less risk-averse, could be more willing to take chances in arbitration, thinking that unpredictability could work in their favor. The discrepancy in settlements could therefore be a result of players' aversion to the uncertainties introduced by an arbitrator whose decisions are difficult to predict. 5. a. Performance

i. Example: A NHL hockey player is consistently scoring more goals and improving in their general skills. ii. Effect of VMPL: The player's improving performance likely increases the team's success and overall performance, potentially leading to more wins, higher game attendance, and merchandise sales. Leading to the player's VMPL rising, which could allow them to negotiate higher salaries based on their improved contributions to the team's success. b. Injury i. Example: A NFL football quarterback damages their wrist and does not recover back to their previous ability. ii. Effect on VMPL: The player's reduced contribution due to weaker performance may result in fewer points scored, diminishing team performance, and potentially lower attendance at games. This could lead to the player's VMPL decreasing due to their diminished impact on the team's success. In contract negotiations, the player may not be able to negotiate the same salary level as before the injury, reflecting the reduced VMPL. 6. 7. In the MLB each team has roster constraints where there is a certain number of hitters and pitchers that each team is allowed to have. Ohtani is unique because he can fill both spots on a team's roster. This is beneficial as one spot is essentially open, allowing the team to add new players that keep the team competitive. Ohtani is the only player at this level that can do this which is why he is in a unique position. This also allows him to get the highest value contract in the MLB because he is such a beneficial asset to a team. He also has high entertainment value because he has such a rare skill set, people want to want him. A pro of trading Ohtani before his free agency is that you would still be able to extract value from him in case he walks. If he leaves in free agency nothing positive happens for the Angels. Or by trading him the Angels would be able to get players up to the value of Ohtani. 8. Mens and womens tennis should be paid based on the amount of revenue they bring in. If mens and womens tennis brings in roughly the same amount of money then they should both be paid the same. Economically, the "fair" amount of prize money can be determined by assessing revenue generation, such as TV ratings, sponsorship deals, ticket

sales, and overall viewership. If one gender significantly contributes more to these revenue streams, it could be economically justifiable to pay the genders differently. This can be hard to determine because people can view stats differently. While TV ratings and viewership statistics can provide insights, interpreting the data to assess the true economic impact of each bracket is difficult as if they believe it matters in determining this.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

Week 2 Case Study.docx

Week 4 case study.docx

QE1 - Dryville - Estimating demand & benefits for a public good.xlsx

Week 2 - Assignment BUS638.pptx

Econ 201 Chapter 2 practice.docx

1 FS analyses cash flows taxes.xlsx

annotated-Tight%20End%20Strike.docx.pdf

Business Memo.docx

Econ 1150.PS#5.Answers.23.docx.pdf

HW#6_Chap 6 and 7_AGEC1113.docx

HW#4_AGEC1113_Sp23.docx

ECON490 Valuation of Nonmarket Goods Homework 1.pdf

Recommended textbooks for you

Microeconomic Theory

Economics

ISBN:9781337517942

Author:NICHOLSON

Publisher:Cengage

Managerial Economics: Applications, Strategies an...

Economics

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

ECON MICRO

Economics

ISBN:9781337000536

Author:William A. McEachern

Publisher:Cengage Learning

Exploring Economics

Economics

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:SAGE Publications, Inc

SEE MORE TEXTBOOKS

Recommended textbooks for you

Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc