Date of Award

2019

Document Type

Thesis

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Monica Das

Abstract

Throughout my research I seek to understand the role projection bias plays within Major League Baseball (MLB). Projection bias stems from the field of behavioral economics, which as a whole seeks to understand the psychological side of the individual’s economic decision-making process. MLB teams have contuinally seeked ways to better analyze the performance of players prior to signing them. By limiting projection bias, teams will be able to better allocate their funds to players who are most likely to remain consistent or even increase in performance folowing the contract. White and Sheldon (2014) show through empirical evidence that MLB players tended to increase their performance in the year prior to entering free agency. Their study also demonstrated that players tended to decline in performance following their contract. It is possible that this phenomenon known as contract theory is a reasoning for the decline in player performance; however, General Managers also may be at fault for this occurrence. In my research, I analyze players who have signed long-term deals while comparing their statistics pre and post contract. My results show which General Managers have been more susceptible to projection bias while also discussing the potential causes.

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