Date of Award

2016

Document Type

Thesis

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Joerg Bibow

Abstract

Modern statistical analysis has allowed for teams to more accurately measure Major League Baseball player performance. However, other than tracing wins there are few ways to track the performance of on-field managers whose strategies, decisions, and expertise fundamentally influence the outcome of each game. I begin this paper by investigating and critiquing prior empirical analyses that have attempted to quantify the effect of managerial skill on team performance. Using Stochastic Frontier Analysis and data from the 2008-2015 MLB seasons, I expand on previous research by calculating managerial efficiency estimates while including control variables that better objectively measure player performance. I find that the least efficient managers achieve winning percentages that are around 80% of what is possible, given their players’ talent level. I then test the foundation from which MLB General Managers pay their managers. By using an ordinary least squares regression, I find that managers are rewarded with contracts based on management experience, but not efficiency. Thus, I provide evidence of an inefficiency in the market for MLB managers. Finally, I explain the implications of this inefficiency and how further research is needed to analyze managerial effectiveness at the in-game level.

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

Included in

Economics Commons

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