Thursday, May 05, 2005

Stick a Fork In Me!

Just not in my ear... that would kill me. Seriously though, I am done. I just found out that I got a 96 on my Calc III final, making my final grade a 95.25%. Sounds pretty good, until you consider that the prof was sadistic and required a 95% in order to get an A. Two points the other way and I would be super pissed right now. Ok, I don't like to talk about grades, just that this has been a pretty good semester, in that I had three math classes that I really liked and I appear to have done well in them.

On the economics front, everyone should read Richard Thaler's paper on the NFL draft. It is available on nber.org. My one complaint is that he (and other papers on sports) assume that having good players is the ultimate goal of a team. I would argue that the ultimate goal of a team is to make money. If a team was to attempt to change to a discount hunting strategy they may get better value in their players, but it may also signal to fans that the owner is not serious or a cheapskate, which could spell trouble for ticket sales. Also, when discussing the surplus value of players, his analysis only looks at their on field value. We all know, however, that some players have a celebrity that likely adds to ticket sales. To a certain extent, early drafted players come in to the league with high notoriety. Anyway, I really love football, and it makes me excited when economists talk about it!

Finally, go see Hitchhiker's Guide to the Galaxy. I saw it last weekend and now I have to read those books this summer!

2 Comments:

Anonymous Anonymous said...

I think you mentioned it a little but don't you think that good players is endogenous to making money?

Good players => winning => making money

Great players (i.e. see Shaq) are unique in that they will make a team win right away.

But I think winning => making money. And not the other way around.

May 6, 2005 at 8:04 AM  
Blogger Andy said...

I agree with you that winning would lead to making money, I am just saying that a player may not look like his surplus value accounts for his high draft price (in terms of trading draft spots), but that the failure of a team to compete in the draft might signal to fans that management has become apathetic.

Certainly, good players lead to winning and winning to making money (just ask Arizona about what a losing teams profits look like). However, teams profit from superstars in other ways as well: not only from the increased ticket sales, but also from merchandise like jersey sales.

After rereading Thaler, I noticed that he does mention my arguments here. I don't think he completely dispells them, but there is reason to believe that there is still overconfidence and other psychological effects that would tend to cause teams to overbid players relative to their relative onfield values, but perhaps not by as much as Thaler's study shows.

May 6, 2005 at 9:37 AM  

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