Cade Massey and Richard Thaler analyze the decision making of National Football League teams during their annual player draft where the stakes are high. The volume of data makes this a rich environment to study the interaction of psychological factors and draft pick value. Using archival data on draft-day trades, player performance and compensation, they compare the market value of draft picks with the surplus value to teams provided by the drafted players and find that top draft picks are overvalued in a manner that is inconsistent with rational expectations and efficient markets yet consistent with psychological research.
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