Examining a Sunk Cost Effect in the Managerial Decisions of Major League Baseball
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Title:
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Examining a Sunk Cost Effect in the Managerial Decisions of Major League Baseball |
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Author:
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Harkins, Patrice
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Advisor:
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Ball, Richard J.
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Department:
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Haverford College. Dept. of Economics |
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Type:
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Thesis (B.A.) |
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Issue Date:
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2011 |
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Abstract:
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This paper investigates the existence of a sunk cost effect in the decision making processes of the Major League Baseball clubs’ management. This study builds on previous
research, which points to an influence of these prior investment costs on decisions in the
National Basketball Association. Since in a drafting system team franchises only can make a one player selection per round, the draft order represents a tangible cost to teams both in opportunities forgone and the financial investment of salary contracts. If a sunk cost effect is
present, then a franchise will keep a player regardless of the player's performance because of the prior investment made in the player. Using OLS, Logit, and survival analysis models, 7681
players were analyzed over 20 draft years, 1985-2005. Findings showed that a player’s overall draft pick had a significant effect on games played and number of at bats. The higher (lower numerically) a player was drafted; the greater was the probability that the player would reach the
Major Leagues. Additionally, survival analysis results showed that low draft picks made it to the Major League teams quicker. |
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Subject:
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Sunk costs -- United States
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Subject:
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Major League Baseball (Organization) -- Personnel management
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Subject:
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Baseball players -- Economic conditions
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Terms of Use:
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http://creativecommons.org/licenses/by-nc/3.0/us/
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Permanent URL:
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http://hdl.handle.net/10066/6928
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Files in this item
Citation
Harkins, Patrice.
"Examining a Sunk Cost Effect in the Managerial Decisions of Major League Baseball".
2011. Available electronically from
http://hdl.handle.net/10066/6928.
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