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Modeling Salary Arbitration: Introduction

This post is part of an ongoing arbitration research project and is coauthored by Alex Chamberlain and Sean Dolinar.

Feb. 25: 2015 MLB Arbitration Visualized

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Sean and I share a mutual passion for knowledge and understanding how things work. Said mutual passion is magnified when regarding baseball-related matters. With that said, the mysterious arbitration process intrigues us. We joined forces to try to crack the code, so to speak, and we would like to share the fruits of our labor with you.

Players with anywhere from three to six years of service time are eligible for salary increases based on performance. Teams and players typically reach settlements outside of arbitration, but if they can’t agree on a salary figure, both sides enter the formal arbitration process, as described here by FOX Sports.

Therein resides the questions intrinsic to the process: How do teams and players decide what is an appropriate dollar-value raise in salary? How does an arbitration panel decide in favor of one side or the other?

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