SCORE TO WIN BIG By Ashley Nissenbaum About

SCORE TO WIN BIG By Ashley Nissenbaum

About the Authors David J Berri, Ph. D � Associate Professor in the Department of Economics � Economics of Sports Stacey L Brooke, Ph. D � Associate professor in the Department of Economics � Behavior of sports leagues and decision making in professional sports Martin Schmidt, Ph. D � Associate professor in the Department of Economics

Instrumental Rationality Douglass North (1994) � “…Informational feedback process and arbitraging actors will correct initially incorrect models…” Abundance of information in sports and failure results in loss of revenues � So why not follow instrumental rationality? ? ?

Straying from Instrumental Rationality Moneyball � On Base Percentage was undervalued by decision makers “Go For It” � NFL coaches acted conservative while going for it on the 4 th down Draft Position in the NBA � Slow to adapt to new information

Lessons Learned Lesson 1 � Lesson 2 � Team Payroll is not highly correlated with team wins Lesson 5 � Team wins drive team revenue Lesson 4 � Player productivity on the court creates team wins Lesson 3 � Points scored dominates the evaluation of player productivity in the NBA Player performance is relatively consistent across time Lesson 6 � NBA efficiency is not about efficiency

Examining the All Rookie Team 3 variables � Player Performance (NBA efficiency , Wins Produced and Points Scored) � Draft Position � Number of Games Played

Examining the All-Rookie Team

Collection of Player Statistics

Elasticity of Voting Points scored has the largest impact on voting points

A Test of Free Agents Data from 255 players with multiyear contracts Dependent variable – average real salary over contract life Considered a number of non-performance factors: � Injury (captured in number of games played) � Market size � Player position � Experience

Estimated Coefficients

Entire Vector of Player Statistics