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One thing that is important here is whether the counterfactual is the marginal employee, or nobody. In the sports roster case, a soccer/baseball team would be
by oli5679 5y ago
One thing that is important here is whether the counterfactual is the marginal employee, or nobody.
In the sports roster case, a soccer/baseball team would be in trouble if they lost one of their average-talent players if they didn't have anyone on the pitch but there might be a plentiful supply of low-cost players willing to work for a similar amount.
This means that the counterfactual of 'lose average player and replace with noone' suggests that the player has a very high counterfactual theory of value, but 'lose average player and replace with similar average player' suggests that the counterfactual value is not high.
There might be a star player such that they are not replacable by anyone, or by anyone also able to demand a high salary from an alternative team, and they would have a very high value according to both counterfactuals.
It seems to me that many sports teams operate with the 'similar average player' counterfactual.
I think you could draw analogies to businesses and employee pay.