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Psychologists have found that most decision makers are overconfident--they overestimate their abilities in many domains. Some economists (especially those from the University of Chicago) claim that such tendencies are mitigated or eliminated in markets with high stakes and opportunities for learning. In a study conducted with GSB alum Cade Massey, now at Yale, we have found that National Football League teams display the same overconfidence as typical subjects in psychology experiments. Specifically, we find that teams greatly overvalue the right to pick early in the annual draft of new players. The market for such picks is wildly inefficient. There are important implications for this finding for other markets such as the market for CEOs. Keynote Speaker: |
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