Blue Jays, MLB Negotiations, And The Ultimatum Game

The proposed 60-game season will help the Blue Jays in some ways and hurt them in others.  How did the MLB and MLBPA get there?

It was the best of times, it was the worst of times.

The proposed 60-game schedule – and the possible expanded playoff – could work to the Blue Jays’ advantage in 2020.  A shortened season increases the effect of variability – one projection has the Jays’ odds of winning a playoff spot at 0.9% in a 162-game season, but 16.7% in an 81-game season.  But on the other hand, the Jays have an unusually strong young core and farm system who are still learning their craft.  The loss of more than a half-season of development time will hurt a Vladimir Guerrero Jr. or a Bo Bichette far more than it would a more established player like a Nolan Arenado or Carlos Correa.  And it could hurt a SWR or a Groshans even more.

Which begs the question: how did we get here?

Several writers have suggested that a solution to the negotiation between the MLB and MLBPA should have been straightforward:  just calculate the amount of money “on the table” and split it down the middle.   But it did not work out that way.  Why not?

There is a phenomenon in behavioural psychology called “the ultimatum game” that might explain the difficulty.  Imagine you won a lottery, with a $1 million prize. The only catch is, you have to share your winnings with a stranger (“the responder”).  You can offer any portion of the $1 million that you choose, but you only get one offer.  If the responder accepts, then you both get your shares.  If the responder refuses, you both get nothing.  How much do you offer?

Toronto Blue Jays

If the responder were an unemotional computer, you could probably get away with offering very little.  The computer would compare the benefit to itself of getting (say) $1,000 vs zero, and would take the thousand.  But people are not computers.  Researchers found that people would frequently reject offers that they perceived as unfair (such as less than 20%), even though they fully understood that this rejection meant that they would receive nothing at all.

There are some interesting experimental insights that could apply to the current MLB/MLBTR stalemate.  When the winner and the responder shared social ties – members of the same club, or from the same village – the winner was far more likely to make a “fair” offer (30% or more, sometimes up to 50%).  That the MLB and MLBPA were both unable to do so implies that they perceived each other as adversaries rather than working to a common goal.

Psychologists have wondered why the responders consistently act in this (on the face of it) illogical manner.  Some have speculated that the wealth of the responder and the size of the payout plays a factor.  If the pot were $100 and the winner offered $10, many responders would refuse.  But if the pot were $10 million and the winner offered $1 million, most responders would accept – even though the offer is the same 10%.  In an argument between “billionaires and millionaires” the income from one season might not be so high as to force the outcome.  Unlike Alfred P. Doolittle, both parties can afford to indulge their pride.

A second suggestion is that parties will sometimes sacrifice the present for the future.  Under this rationale, the responder will refuse an unfair offer to “teach the winner a lesson” and to hopefully induce them to act more benevolently in the future.  This argument is particularly relevant to the MLB and MLBPA this year, given the upcoming CBA negotiations in 2021.  Is it possible that both sides perceived establishing a strong negotiating position for the future as more important that a short-term gain in the present?

Another suggestion is that there is more involved in the utility determination than just the money for the negotiators themselves  Some years ago, I was (jokingly) asking a colleague of mine why he was not a meaner negotiator.    He replied that his reputation was of greater long-term importance than a few short-term dollars.  Is it possible that MLB and MLBPA leadership are both concerned with how they are perceived, both within their constituencies and generally by the public?  And that – for themselves personally, as well as for their organizations – no deal at all (or an imposed deal) is better than being perceived as the “loser” or weak?

One final thought: researchers found that people who complained about the generosity of the winners when they were in a responder role exhibited similar winner tendencies when the roles were reversed.  This would imply that the behaviour of each negotiating side in the current MLB dispute would depend on whether they perceived themselves to be the “owner” of the game (i.e. the winner rather than the responder).  Is it possible that both sides perceived themselves to be the “winners”, and that both accordingly felt that *they* should receive the lion’s share?

The bottom line

It appears (barring further coronavirus outbreaks) that there *will* be an abbreviated season in 2020.  That is clearly far better than no season at all for the Blue Jays. However, it is interesting to speculate on why it took so long, and the dynamics (both financial and psychological) underlying the negotiating difficulties.