With Jones there are three outcomes. Avoid arbitration and take the midpoint ($2.375 M). Go to arbitration, win, and get $2.5 M. Or go to arbitration, lose, and take $2.25 M.

If he loses in arbitration, he’s getting $125 K less than what he would have gotten by splitting the difference. If he wins, he gets $125 K more than he would have. Neither is a big figure in comparison to his overall salary. He’s guaranteed $2.25 M. He could play it safe and go for $2.375 M, or he could take a risk for the chance of $2.5 M.

]]>