Draft preparation is a tense time for general managers. Expectations are high. The future of the team will be decided in this draft. Unlike in the NFl, perhaps NSFL general managers could ease their minds knowing that they're employing sound draft strategy according to behavioral economics.
If behavioral economics sounds out of place, trust me it isn't. Cade Massey, a professor at Pennsylvania's Wharton School, and University of Chicago's Richard Thaler analyzed nearly 15 years of historical draft data. By comparing players' draft positions with their eventual career production, Massey and Thaler found something interesting: top picks are overvalued. Because early round picks are so expensive, they drastically underperform second or third round picks when you factor in salary. Put simply, teams looking to get the best return on investment are better off with multiple picks in the late first and early second rounds.
In terms of financial efficiency, it's clearly a smarter move to trade down in the first round. But there's another advantage to this strategy: diversification. On the whole, it's better to turn one pick into two or three, especially if they're in the same round. The economists point out that when positions selected back-to-back are compared retroactively, there's only a 52% chance that the first player is better. Again, if you trade one high-value early round pick for two or three later round picks, the diversification insulates you against one of the players being a dud.
This concept of behavioral economics and its application to professional sports is fascinating and a must-read for any general manager. I strongly suggest checking out Misbehaving: The Making of Behavioral Economics by Richard Thaler.
If behavioral economics sounds out of place, trust me it isn't. Cade Massey, a professor at Pennsylvania's Wharton School, and University of Chicago's Richard Thaler analyzed nearly 15 years of historical draft data. By comparing players' draft positions with their eventual career production, Massey and Thaler found something interesting: top picks are overvalued. Because early round picks are so expensive, they drastically underperform second or third round picks when you factor in salary. Put simply, teams looking to get the best return on investment are better off with multiple picks in the late first and early second rounds.
In terms of financial efficiency, it's clearly a smarter move to trade down in the first round. But there's another advantage to this strategy: diversification. On the whole, it's better to turn one pick into two or three, especially if they're in the same round. The economists point out that when positions selected back-to-back are compared retroactively, there's only a 52% chance that the first player is better. Again, if you trade one high-value early round pick for two or three later round picks, the diversification insulates you against one of the players being a dud.
This concept of behavioral economics and its application to professional sports is fascinating and a must-read for any general manager. I strongly suggest checking out Misbehaving: The Making of Behavioral Economics by Richard Thaler.