Title: Overconfidence vs. market efficiency in the National Football League
Description: "A question of increasing interest to researchers in a variety of fields is whether the incentives and experience present in many "real world" settings mitigate judgment and decision-making biases.  To investigate this question, we analyze the decision making of National Football League teams during their annual player draft.  This is a domain in which incentives are exceedingly high and the opportunities for learning rich.  It is also a domain in which multiple psychological factors suggest teams may overvalue the "right to choose" in the draft -- non-regressive predictions, overconfidence, the winner%u2019s curse and false consensus all suggest a bias in this direction.  Using archival data on draft-day trades, player performance and compensation, we compare the market value of draft picks with the historical value of drafted players.  We find that top draft picks are overvalued in a manner that is inconsistent with rational expectations and efficient markets and consistent with psychological research"--National Bureau of Economic Research web site.
Subjects: Econometric models, Football draft, National Football League
Places: United States