Norets, AndriyWhitaker, Kevin2013-07-092026-09-292013-07-092026-09-292013-04-152013-07-09http://arks.princeton.edu/ark:/88435/dsp01xs55mc153https://theses-dissertations.princeton.edu/handle/88435/dsp01xs55mc153There have been few empirical analyses of firms’ risk preferences with respect to labor, largely because the necessary information is not available in many industries. In this study, a model of salary determination in Major League Baseball is developed and used to measure the risk preferences of employers. Using a sample of 1,599 contracts signed from 1993 to 2012, MLB teams are found to be risk-seeking in labor, but only for short-term contracts; in contracts spanning more than one year, teams show no significant risk preference. This pattern is consistent with a new theory of wage determination, in which firms prefer risky workers while risky workers prefer long-term income security.74 pagesen-USPrinceton University Senior ThesesWalk-in Access. This thesis can only be viewed on computer terminals at the <a href=http://mudd.princeton.edu>Mudd Manuscript Library</a>.