ARBITRATION VERSUS NEGOTIATION - THE RISK-AVERSION OF PLAYERS

This paper explores the effects that skill and experience have on a ba seball player's decision about whether to negotiate with his team or t o enter into arbitration. The action taken by players who are eligible to file depends on their perceived trade-off between various types of risk such as the possibility of injury and the risks inherent in the arbitration process. Experience increases the chance that a player wil l go through arbitration, a high skill level decreases that chance, an d a large spread between offered and desired salaries makes a negotiat ed solution more likely.