via

The highly anticipated National Football League Draft begins tomorrow evening (4/22/10) and, for the first time, will be televised during prime time on ESPN and NFL Network.  This is the NFL’s most important off-season event and followed closely by fans around the world.  But, two scholars suggest the process is flawed because teams significantly overvalue early draft picks.

Richard Thaler’s (Booth School of Business, University of Chicago) recent New York Times’ article takes a look at how the NFL draft works, specifically giving underdog teams earlier picks to improve their ranks and win games. Yet, he writes, “We found that the teams choosing early in the draft generally don’t, in fact, get the players that provide the most value per dollar.”

He and Cade Massey (Yale School of Management) recently revised their paper “The Loser’s Curse: Overconfidence vs. Market Efficiency in the National Football League Draft” that says late first-round picks actually generate more value than early first-round picks.  Download the paper from SSRN.com: The Loser’s Curse.

Here are the top 5 papers downloaded from the SSRN eLibrary for the week ending December 4, 2009:

1. Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis
by Brent T. White (University of Arizona – James E. Rogers College of Law)

2. Luck Versus Skill in the Cross Section of Mutual Fund Returns
by Eugene F. Fama (University of Chicago – Booth School of Business) and Kenneth R. French (Dartmouth College – Tuck School of Business; National Bureau of Economic Research (NBER))

3. A Quantitative Approach to Tactical Asset Allocation
by Mebane T. Faber (Cambria Investment Management)

4. The Loser’s Curse: Overconfidence vs. Market Efficiency in the National Football League Draft
by Cade Massey (Yale School of Management; Duke University – Fuqua School of Business) and Richard H. Thaler (University of Chicago – Booth School of Business; National Bureau of Economic Research (NBER))

5. Governance Matters VIII: Aggregate and Individual Governance Indicators, 1996-2008
by Daniel Kaufmann (The Brookings Institution) and Aart Kraay (World Bank – Development Research Group (DECRG)) and Massimo Mastruzzi (World Bank Institute)