It's been a while now since I've taken intro econ, but is there any reason to expect such a market with so few buyers and so few sellers to be effecient? It seems like with small closed systems efficiency is hampered because even if a buyer is willing to pay a lot for a certain resource, he might not be able to find it, and vice versa.

basically, the argument here is that baseball GMs fail systematically to incorporate all reasonable forecasting information when bargaining for talent, or that they are "too" shortsighted, or both.

To me, it seems like the auction format for buying up players exaggerates small differences amongst players. Certainly it is to Torii's credit that he had a good year last year--a good year is better than a bad year--but how much does that really matter?

I don't have any evidence to back this up, but it seems like you usually don't see too many similar contracts handed out to similar players in the same offseason. The guy who is considered the best gets a huge deal, the next best guy still gets a lot, but simultaneously a lot less than the top guy, etc. Though I don't necessarily see why this should be the case, it seems that when you eliminate one buyer and one player from the market that this increases the remaining buyers' leverage, and the remaining players sign for what always seems to be a lot less.

Also, would it be especially surprising that at least some baseball GMs don't incorporate all reasonable forecasting information into their decisions when some of them are openly hostile towards certain forms of evaluation? I'm not saying it's everyone, but it only takes one Brian Sabean to give Barry Zito a Mike Hampton contract.

Why? Why should we believe that the baseball free agent market is not "efficient"? I'm not saying it is, just asking the question.

basically, the argument here is that baseball GMs fail systematically to incorporate all reasonable forecasting information when bargaining for talent, or that they are "too" shortsighted, or both.

Suppose it is the latter. Against what standard? Against how an equally well-informed owner would behave? that seems reasonable (implying that this is an agency problem in the argot of delegation theory -- how does the owner get the GM to do what he wants done, given that the owner lacks full information?)

So, do we really believe that GMs have an inappropriately large discount rate, so that future contractual dollars committed are undervalued compared to what the owner would really like done? How the heck could this state of affairs be an equilibrium? That is, why wouldn't impatient GMs tend to be found out by owners over time and removed, thus leading to the industry being dominated by owner-GM pairings with concordant attitudes toward the longer run?

I guess where I'm headed is in challenging Cameron's conclusion that Torii should be regarded as a "landmine" (even though I agree with SBG's and others' arguments against signing Torii to a fat, multi-year contract). That assessment is conditional on one's time horizon. People differ on that.