It is a commonly held belief that the better an MLB team is, the more important it is for them to buy talent before the July 31st trade deadline. To our knowledge, there have been no peer-reviewed, empirical studies on this issue. In this study, we hypothesize that this is only partially true. While borderline playoff teams have more of an incentive to buy than non-playoff teams, we argue that such incentives decrease among super teams—teams who are all but assured of making the postseason. To demonstrate this, we use game theory to model the decisions teams of different talent levels face. Assuming teams are rational, borderline teams should display buying behavior significantly more than super teams. To empirically test this, we use fixed effects, logit models with a variety of proxies. The results, however, are inconclusive, and we can make few certain conclusions. This study is the first step towards addressing this relationship, but further research is necessary for a resolution to our hypothesis.
Wasserzug, Eric F., "Incentives to Buy: An Analysis of Trading Behavior Among Competitive Teams in Major League Baseball" (2020). Senior Independent Study Theses. Paper 8922.
Bachelor of Arts
Senior Independent Study Thesis
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