SCORE TO WIN BIG By Ashley Nissenbaum

About the Authors  David J Berri, PhD  Associate Professor in the Department of Economics  Economics of Sports  Stacey L Brooke, PhD  Associate professor in the Department of Economics  Behavior of sports leagues and decision making in professional sports  Martin Schmidt, PhD  Associate professor in the Department of Economics  Macroeconomics and economics of sports

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 4th down  Draft Position in the NBA  Slow to adapt to new information

Lessons Learned  Lesson 1  Points scored dominates the evaluation of player productivity in the NBA  Lesson 2  Player productivity on the court creates team wins  Lesson 3  Team wins drive team revenue  Lesson 4  Team Payroll is not highly correlated with team wins  Lesson 5  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  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