April 27, 2012

Game Theory Analysis of the 2011 NFL Lockout

Ryan Hable, Advisor: Stacie Bosley

In professional sports, prolonged labor negotiations have become increasingly common, sometimes resulting in lockouts or strikes. These labor disputes provide a unique opportunity to compare recent real-life decisions to past disputes in professional sports, and to understand those decisions in the context of economic theory. This study seeks to expand on past literature by using techniques and theories to analyze the optimal decision for the NFL in the 2011 lockout. A negotiation model is built to understand the importance of various factors such as the inflation rate, the growth rate of revenues in the NFL, the rate at which payoffs are discounted and the probability that an offer is going to be accepted. Using this model, other lockouts, such as the 2011 NBA lockout, can be analyzed.