The Loser's Curse
4/22/2006
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Top picks do perform better than lower-round choices, but performance falls much more slowly than compensation. The most value per dollar can be found in the second half of the first round and in the second round […] The payoff peaks at about the 43rd pick […], who brings in a five-year performance worth around $750,000 more than his price. Of those first forty-three selections, the No. 1 pick is actually the worst in cost-benefit terms, since that player eats up so much of the budget. […]
The good news for teams is that the whole draft is a good deal, as the rookie salary caps keep prices artificially low. […] "The Loser's Curse", after Massey & Thaler
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