A Topology of Baseball Player Behavior

Abstract

The owner of a Major League Baseball team is interested in achieving a specific goal. The goal may be to win a championship, secure a position of prestige in the community, earn a profit, or some combination of these and other aspirations. In the course of reaching the goal, baseball games must be played. Since the owners cannot play the games themselves, they must hire players to do it for them. Economists term this arrangement the principal-agent relationship. In this relationship, the principal— the owner — contracts with the agent — the player — to perform a service on the principal’s behalf. Like owners, players also have goals, such as winning a championship or earning fame or fortune. While there may be some similarity, there is no assurance that a player’s goal is consistent with that of the owner. The prospect that the goal of the principal and agent may not naturally align is the principalagent problem. Furthermore, a player shirks when his pursuit of a personal goal hinders the owner’s efforts. For example, an owner’s goal of winning a World Series championship can be compromised by a player who stands and admires — rather than running from first base during —what appears to be a certain World Series home run and is subsequently thrown out at the plate when the hit bounces off the top of the outfield wall. a player benched during a playoff game who is caught by the television camera playing cards in the dugout tunnel. a player who, on the eve of the playoffs, is arrested for drug use in violation of his probation. From the owner’s perspective, the solution to the principal-agent problem lies in the terms of the player’s contract. Contracts need terms that give players the incentive to perform in a manner that is most likely to result in the team reaching the owner’s goal. However, finding the right contract terms is complex. For example, the level of a player’s salary is usually the most important component of a contract. The owner must balance the trade-off between paying a player a high salary to elicit his very best performance and maintaining an acceptable level of team profits. Furthermore, the rules set forth by the collective bargaining agreement and the presiding culture in the labor market affect players’ behavior and the effectiveness of alternative contract terms. Consequently, to negotiate the optimal contract terms, the owner needs in