Is Self-Interest in the Self-Interest of Free Agents?
During cold winters, unemployed Major League Baseball players refuse the warmth and security of multi-million dollar multi-year job offers. Fans, watching from a judgmental distance, remain convinced that once they had enough money to live on, they would accept the first offer thrown their way, or whatever their favorite squadron suggested was their market value.
That the behavior of every rich person ever suggests otherwise is merely anecdotal evidence, I suppose. Fortunately, more rigorous experiments contradict the well-meaning fan as well. In the “ultimatum game“, one player proposes how a sum of money is to be divided between himself and another player. If the second player accepts the offer, they receive what they agreed on. But if the second player rejects the offer, they each receive nothing. If the second player is offered anything, that’s more than what he started with, and so one might expect self-interest to dictate that he take it. However, player 2 usually rejects offers below 20-30% of the total. Nothing is not always better than something, apparently.
Some theorize that anger or a wish for revenge motivates rejecting the offer. Others see the rejection as part of a longer term negotiating ploy- as it may appear to be when free agents reject contract offers, however lucrative. How to decide? The New York Times Magazine reported this week that researchers have tested these hypotheses by running the experiment with drunken participants. The explanation? Alcohol causes “the drinker to overly focus on the most prominent cue in his environment.” If rejecting the offer was a negotiation tactic,
“Drunken players would be more inclined to accept any amount of cash [because] money on the table generates more-visceral responses than long-term goals do. [But] if the anger/revenge theory were true, however, drunken players would become less likely to accept low offers: raw anger would trump money-lust.”
The experimenters reported that drunken players were more likely than sober players to reject offers of less than 50 percent of the total. They concluded that the wish for revenge was the motivating factor.
But this is an insufficient explanation. Revenge for what wrongdoing? Why is being offered money something that should provoke anger or a wish for revenge at all? Should a drunken Jason Bay want revenge on the Red Sox for offering him 4 years and 60 million dollars? Some suppose that people are provoked to anger by perceived unfairness. But there is no reason to think the money should be split evenly- “fairly”- to begin with. Free agents never demand 50% of the teams’ profits, nor do they demand that all free agents be paid equally. Player 2 has no reason to think the total money of the ultimatum game should be divided evenly. It was given to player one, after all; isn’t it “his” money? Moreover, offers of less than 50% are frequently accepted. Fairness is not the issue.
Instead, the issue is status. It is condescending- with the emphasis on descending, i.e. moving down towards or looking down on- to offer a pittance to Player 2. To offer a pittance is to take pity, and to take pity is to be in a sufficiently lofty position as to be above the pitiful place of the other. If Player 2 perceives he is being treated as less worthy than Player 1, as someone who is being pitied, then he gets proud- he doesn’t need anybody’s charity!- and he rejects the offer. Even though charity is more than nothing. This explains the revenge; revenge is the reassertion of status- you demeaned me, I’ll show you who you’re dealing with. And so forth.
As everybody, sober and drunk, knows, alcohol makes us more status-sensitive, so of course alcohol exacerbates the condition, and makes Player 2 more likely to perceive a diminishment of status. Some guy bumps into another some guy at some bar, and the slight is perceived as fightin’ words, as an indication of the superior status of the bumper over the bumpee, as the bumper’s rude declaration of his right to occupy that counter space, and, just like that, the bumpee’s injured status wants to show that guy who’s boss, and generates a brawl.
You can’t be higher or lower than someone else without a someone else, so status is relative, or comparative. Who has not heard a free agent say “it is not about the money, it’s about respect“? But is it disrespectful to offer someone millions of dollars? “Being respected” is code for being perceived as of a higher status than the other guy. Nomar Garciaparra rejected a four-year, $60 million offer from the Red Sox after the 2003 season. Was them fighting words? It was not a coincidence that Derek Jeter had signed a $189 million, ten-year contract in 2001. Or that A-Rod had signed a 10 year $252 million contract. When you stand up for status, you might not have a leg- or arm, or shoulder, or back- to stand on, to which Nomar’s post-2003 career attests.
Sometimes the other guy is even one’s own past self. ESPN reported today that free agent outfielder Johnny Damon doesn’t even want the Yankees making him an offer if they’re going to offer him less than the $13 million per year he made on his previous contract. He’d rather take nothing at all than accept a demotion, even if the demotion gets him 12.9 million dollars.
When Jason Bay rejected a 4 year 60 million dollar offer from the Red Sox this past week, his agent said he was ready to “move on”. Instead, the Sox moved on, inking former Angels righty John Lackey to a 5 year 82.5 million dollar deal, and signing outfield defensive whiz Mike Cameron to a 2-year deal. (Interestingly, Cameron put aside his status as an elite centerfielder to sign the deal, instead professing his willingness to play left as the team’s needs dictate.) Combined with the recent acquisition of Jeremy Hermida from Florida, the glut of outfielders- and dollars spent- virtually ensures that Bay is done at Fenway.
Jason Bay did not strengthen his negotiating position with Theo Epstein by rejecting the Red Sox’ offer. Nor does having one fewer team in the market with which to sign strengthen his negotiating position with other teams. Right now Jason Bay is unemployed, and a four year 60 million dollar contract is a lot of money and security. 20 years ago (or even 11!), that contract would have made him the highest paid player in the game. But today it wasn’t better than nothing. Because Bay’s status does not exist relative to Andre Dawson’s or Dale Murphy’s or Eric Davis’. His pride, his respect, his sense of whether he is subjugated to the demands of a front office and their tools of objective analysis and value-discernment, or whether he feels that he has the power and authority to get what he wants is on the line. He may of course get what he wants. He may still be in the position to demand, rather than to receive, to be the alpha male to Omar Minaya’s endless beta. Or he may be a drunk with no money and a black eye. It may not be fair, but it’s what he asked for.
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