Behavioral Economics in the NFL

Bursik, Paul B.

doi:10.1007/978-1-4419-6290-4_15

Paul B. Bursik²

Part of the book series: Sports Economics, Management and Policy ((SEMP,volume 2))

3005 Accesses
1 Citations

Abstract

More than to create a much needed void in the sports economics literature, the main purpose of this chapter is to point out the void that is already there. It is really quite naturally the last void in a field of economics to be filled.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Chapter: USD 29.95; Price excludes VAT (USA)

eBook: USD 149.00; Price excludes VAT (USA)

Softcover Book: USD 199.99; Price excludes VAT (USA)

Hardcover Book: USD 199.99; Price excludes VAT (USA)

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

1.
Jim teaches economics at Eastern Michigan University. He quipped this to Kevin Quinn and me during a conversation at one of the annual meetings of the Midwest Economics Association. I don’t know if the quote originated with Jim, but that is where I heard it first.
2.
In fact, due to the relative infancy of the behavioral economics issues in the NFL, this chapter will include more unpublished work than likely appears in other chapters. This includes, with apologies, some work by the author.
3.
In the interest of full disclosure, the author teaches finance. So examples from finance result from the author’s familiarity with that literature.
4.
Closer to home for the NFL, an internet search including the terms NFL and irrational will produce a wall of literature regarding inefficiencies in the wagering markets for the NFL. Here again, departures from rationality are too obvious to ignore, and cannot easily be explained away.
5.
Perhaps a bad example, since Thaler’s work on the draft has been an important contribution to this literature. It turns out that for behavioral finance professors, low hanging behavioral fruit is now much more plentiful outside of finance than inside of finance—including in studies of the economics of sports!
6.
A popular version of the draft value chart is shown as in the Appendix.
7.
See the previously referenced draft value chart.
8.
Of course, a team could choose not to spend the extra money on veterans. If the impact is solely to have one more (later) pick or undrafted free agent make the team for those patient teams that are trading down, we would expect those who trade up to have the immediate advantage in terms of on-field performance.
9.
The year of the trade would mean the season commencing in the same year as the draft, about 4 months after the draft.

References

Akerlof G, Dickens W (1982) The economic consequences of cognitive dissonance. Am Econ Rev 72:307–319
Google Scholar
Berri DJ, Schmidt MB (2010) Stumbling on wins: two economists expose the pitfalls on the road to victory in professional sports. Pearson Education, Singapore
Google Scholar
Bursik P (2009) Impatience and opportunity in the trading market for NFL draft picks. In: Presented at the Illinois economic association, October 2009, Available from the author at paul.bursik@snc.edu
De Bondt W (1993) Betting on trends: intuitive forecasts of financial risk and return. Int J Forecasting 9:355–371
Article Google Scholar
Fox CR, Tversky A (1995) Ambiguity aversion and comparative ignorance. Quart J Econ 110(3):585–603
Article Google Scholar
Goetzmann W, Peles N (1997) Cognitive dissonance and mutual fund investors. J Financ Res 20:145–158
Google Scholar
Hakes JK, Sauer RD (2007) The Moneyball anomaly and payroll efficiency: a further investigation. Int J Sport Finance 2:177–189
Google Scholar
Hendricks W, DeBrock L, Koenker R (2003) Uncertainty, hiring, and subsequent performance: the NFL draft. J Labor Econ 21(4):857–886
Article Google Scholar
Kahneman D, Tversky A (1973) On the psychology of prediction. Psychol Rev 80:237–251
Article Google Scholar
Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica 46:171–185
Google Scholar
Kovash K, Levitt SD (2009) Professionals do not play minimax: evidence from major League Baseball and the National Football League. NBER Working Paper 15347
Google Scholar
Lakonishok J, Shleifer A, Vishny R (1994) Contrarian investment, extrapolation, and risk. J Finance 48:1541–1578
Article Google Scholar
Lewis M (2004) Moneyball: the Art of winning an unfair game. W.W. Norton & Company, New York
Google Scholar
Massey C, Thaler RH (2006) The loser’s curse: overconfidence vs. market efficiency in the National Football League Draft. NBER Working Paper. http://www.econ.berkeley.edu/∼webfac/malmendier/e218_sp06/Thaler.pdf. Accesed 15 Aug 2010
Oskamp S (1965) Overconfidence in case-study judgments. J Consult Psychol 29:261–265
Article Google Scholar
Quinn KG, Geier M, Berkovitz A (2007) Passing on Success? Productivity outcomes for quarterbacks chosen in the 1999–2004 National Football League player entry drafts. IASE/NAASE Working Paper Series, Paper No. 07-11. http://college.holycross.edu/RePEc/spe/Quinn_NFLQBDraft.pdf. Accesed 15 Aug 2010
Romer D (2006) Do firms maximize? Evidence from professional football. J Polit Econ 114(2): 340–365
Article Google Scholar
Ross L, Greene D, House P (1977) The false consensus effect: an egocentric bias in social perception and attribution processes. J Exp Soc Psychol 13:279–301
Article Google Scholar
Shefrin H, Statman M (2000) Behavioral portfolio theory. J Financ Quant Anal 35:127–151
Article Google Scholar
Shiller R, Pound J (1989) Survey evidence on diffusion of interest and information among investors. J Econ Behav Organ 12:47–66
Article Google Scholar
Statman M, Thorley S, Vorkink K (2006) Investor overconfidence and trading volume. Rev Financ Stud 19:1531–1565
Article Google Scholar
Svenson O (1981) Are we all less risky and more skillful than our fellow drivers? Acta Psychol 47:143–148
Article Google Scholar
Thaler RH, Tversky A, Kahneman D, Schwartz A (1997) The effect of myopia and loss aversion on risk taking: an experimental test. Quart J Econ 112(2):647–661
Article Google Scholar

Download references

Author information

Authors and Affiliations

St. Norbert College, De Pere, WI, USA
Paul B. Bursik (Associate Professor, Finance Director of Business Administration)

Authors

Paul B. Bursik
View author publications
You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Paul B. Bursik .

Editor information

Editors and Affiliations

, Department of Economics, St. Norbert College, 100 Grant Street, De Pere, 54115-2009, USA
Kevin G. Quinn

Appendix: NFL Draft Value Chart with Pick Numbers and Values

Pk#	Val	Pk#	Val	Pk#	Val	Pk#	Val	Pk#	Val	Pk#	Val	Pk#	Val
1	3,000	33	580	65	265	97	112	129	43	161	28	193	15.2
2	2,600	34	560	66	260	98	108	130	42	162	27.6	194	14.8
3	2,200	35	550	67	255	99	104	131	41	163	27.2	195	14.4
4	1,800	36	540	68	250	100	100	132	40	164	26.8	196	14
5	1,700	37	530	69	245	101	96	133	39.5	165	26.4	197	13.6
6	1,600	38	520	70	240	102	92	134	39	166	26	198	13.2
7	1,500	39	510	71	235	103	88	135	38.5	167	25.6	199	12.8
8	1,400	40	500	72	230	104	86	136	38	168	25.2	200	12.4
9	1,350	41	490	73	225	105	84	137	37.5	169	24.8	201	12
10	1,300	42	480	74	220	106	82	138	37	170	24.4	202	11.6
11	1,250	43	470	75	215	107	80	139	36.5	171	24	203	11.2
12	1,200	44	460	76	210	108	78	140	36	172	23.6	204	10.8
13	1,150	45	450	77	205	109	76	141	35.5	173	23.2	205	10.4
14	1,100	46	440	78	200	110	74	142	35	174	22.8	206	10
15	1,050	47	430	79	195	111	72	143	34.5	175	22.4	207	9.6
16	1,000	48	420	80	190	112	70	144	34	176	22	208	9.2
17	950	49	410	81	185	113	68	145	33.5	177	21.6	209	8.8
18	900	50	400	82	180	114	66	146	33	178	21.2	210	8.4
19	875	51	390	83	175	115	64	147	32.6	179	20.8	211	8
20	850	52	380	84	170	116	62	148	32.2	180	20.4	212	7.6
21	800	53	370	85	165	117	60	149	31.8	181	20	213	7.2
22	780	54	360	86	160	118	58	150	31.4	182	19.6	214	6.8
23	760	55	350	87	155	119	56	151	31	183	19.2	215	6.4
24	740	56	340	88	150	120	54	152	31.8	184	18.8	216	6
25	720	57	330	89	145	121	52	153	31.2	185	18.4	217	5.6
26	700	58	320	90	140	122	50	154	30.8	186	18	218	5.2
27	680	59	310	91	136	123	49	155	30.4	187	17.6	219	4.8
28	660	60	300	92	132	124	48	156	30	188	17.2	220	4.4
29	640	61	292	93	128	125	47	157	29.6	189	16.8	221	4
30	620	62	284	94	124	126	46	158	29.2	190	16.4	222	3.6
31	600	63	276	95	120	127	45	159	28.8	191	16	223	3.3
32	590	64	270	96	116	128	44	160	28.4	192	15.6	224	3

Source: ESPN

Rights and permissions

Reprints and permissions

Copyright information

About this chapter

Cite this chapter

Bursik, P.B. (2012). Behavioral Economics in the NFL. In: Quinn, K. (eds) The Economics of the National Football League. Sports Economics, Management and Policy, vol 2. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6290-4_15

Download citation

DOI: https://doi.org/10.1007/978-1-4419-6290-4_15
Published: 06 December 2011
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4419-6289-8
Online ISBN: 978-1-4419-6290-4
eBook Packages: Business and EconomicsEconomics and Finance (R0)

Publish with us

Policies and ethics

Behavioral Economics in the NFL

Abstract

Access this chapter

Notes

References

Author information

Authors and Affiliations

Corresponding author

Editor information

Editors and Affiliations

Appendix: NFL Draft Value Chart with Pick Numbers and Values

Appendix: NFL Draft Value Chart with Pick Numbers and Values

Rights and permissions

Copyright information

About this chapter

Cite this chapter

Download citation

Share this chapter

Publish with us

Search

Navigation