This paper presents research regarding the effects of wage disparity on performance within Major League Baseball. It tests the effects of intra-team wage inequity on the team's overall performance by applying a number of economic theories, reviewing relative literature and ending in an empirical test. The theories introduced include risk management, the principal-agent theory and tournament theory, as well as behavior economics' equity theory. The above theories were then found in five academic journals whose results have each been examined to provide better insight for the third and final section: the empirical review. The quantitative analysis applies a pooled research approach, testing individual and team performance measures with respect to wage disparity from the years 1985 to 2008.


Ormiston, Russell A.


Business Economics

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



© Copyright 2009 Wright Bradford Smith