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Empirical Economics
Erschienen in: Empirical Economics 5/2019

23.12.2017

Do sunk costs affect expert decision making? Evidence from the within-game usage of NFL running backs

verfasst von: Quinn A. W. Keefer

Erschienen in: Empirical Economics | Ausgabe 5/2019

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Abstract

The presence of the sunk-cost fallacy in expert decision making is tested by examining the within-game usage of players in the National Football League (NFL). Using the exogenous variation in compensation from the NFL’s free agency rules, we show that compensation, which is a sunk cost, significantly increases the number of rushing attempts for NFL running backs. The relationship between rushing attempts and compensation is estimated to be unit elastic. The increase in compensation from being eligible for unrestricted free agency has an equivalent effect on the number of rushing attempts as an additional 174–222 rushing yards in the previous season, which has a value of 13.9–17.8 offensive points.
Vorheriger Artikel School district consolidation policies: endogenous cost inefficiency and saving reversals

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Fußnoten
1
There are a few instances in which the decision to hand the ball to a running back is not predetermined. First, NFL teams may call multiple plays, one of which is chosen at the line of scrimmage. Second, quarterbacks are often given the option to call an audible, change the play, at the line of scrimmage based on the defense. Finally, read option plays offer the quarterback the instantaneous decision to hand the ball to the running back or keep it himself. However, read option plays are less common in the NFL; thus, running back carries are almost entirely determined before the snap of the ball.
 
2
The coefficient on RFA is 0.151. Therefore, the percentage change in compensation is exp(0.151) − 1 = 0.163.
 
3
The coefficient on UFA is 0.396. Therefore, the percentage change in compensation compared to restricted free agency is exp(0.396 − 0.151) − 1 = 0.278.
 
4
The results are robust to the exclusion of previous season rushing attempts. The 2SLS marginal effect is 83.5, and the FE2SLS marginal effect is 90.6. These estimations are available from the author.
 
5
The Kleibergen and Paap (2006) statistic is 15.96, which is above the cutoff of 11.12 for 10% relative bias.
 
6
Our results are robust to the inclusion of head coach fixed effects in place of head coach background and head coach GMs.
 
7
Full regression results for Eq. (6) are available from the author upon request.
 
8
In the regression of utilization rate omitting compensation, the OLS effect of previous season rushing yards is 0.022 and the FE effect is 0.020, both of which are significant to the 1% level. Full results are available from the author upon request.
 
9
Restricting the sample further to players with at least 25 rushes the previous season yields a coefficient of 108.
 
10
Our results are also robust when estimating our robustness check specifications using utilization rate as the dependent variable. The marginal effect of LN(Cap Value) is 17.67 when including current season performance measures and 18.04 when omitting teammate productivity. The coefficient on compensation is 16.43 and 20.22 when restricting the sample to players who played at least five games and those with at least twenty rushing attempts in the previous season, respectively.
 
11
We use this regression as a simple robustness check. It is clear that there may be issues since the first-stage estimation uses a sample that misrepresents the population, as the sample contains player-games whereas compensation and our instruments vary by player-year.
 
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Metadaten
Titel
Do sunk costs affect expert decision making? Evidence from the within-game usage of NFL running backs
verfasst von
Quinn A. W. Keefer
Publikationsdatum
23.12.2017
Verlag
Springer Berlin Heidelberg
Erschienen in
Empirical Economics / Ausgabe 5/2019
Print ISSN: 0377-7332
Elektronische ISSN: 1435-8921
DOI
https://doi.org/10.1007/s00181-017-1399-y

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