ECF2731 Lecture Notes - Lecture 3: Billy Beane, Mangalore Refinery And Petrochemicals Limited, Yottabyte
26 Jul 2018
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Document Summary
Application in major league baseball (mlb) (and popculture) Lewis, m. (2003), "moneyball: the art of winning an unfair game" Billy beane, manager of the oakland athletics faced the following problem: Firms (teams) mainly use one input factor: Performance (output) and salaries are public knowledge. Tight relationship between price (of input factor) and output (performance). Player"s value can be estimated by his marginal revenue product (mrp). Mrp is the value of output provided by an additional unit of input. A player who is solely responsible for a win that is worth $ 5 mill. will have an mrp of $ 5 million. Firms (teams) are bidding for employees (players) and they are willing to pay equal or less than the employee"s mrp. In order to win (and increase revenue) a team needs to score runs. The team at bat can score runs. Batting average: ratio of hits to total at-bats. Slugging percentage: total bases divided by at-bats.
