Initial Public Offerings of Ballplayers

John Burger, Richard Grayson and Stephen Walters (swalters@loyola.edu)
Additional contact information
Stephen Walters: Department of Economics, Loyola College in Maryland

No 624, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: As a field study of choice under uncertainty, we examine baseball teams' investments in amateur players. Though most prospects fail to deliver any return on their multi-million dollar signing bonuses, returns on the minority who succeed easily offset these losses: the expected annual yield on the median first-round draftee is 33 percent. However, the pattern of returns is inconsistent with market efficiency. Yields are lower for high schoolers than collegians (27 percent vs. 43 percent), lower for pitchers than position players (24 percent vs. 41 percent), decline for later round long-shots, and may be negative under competitive bidding.

Keywords: Market efficiency; Bounded rationality; Prospect theory; Winner’s curse (search for similar items in EconPapers)
JEL-codes: D8 G14 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-10
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://web.holycross.edu/RePEc/spe/BurgerWalters_IPO.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://web.holycross.edu/RePEc/spe/BurgerWalters_IPO.pdf [302 Found]--> https://web.holycross.edu/RePEc/spe/BurgerWalters_IPO.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spe:wpaper:0624

Access Statistics for this paper

More papers in Working Papers from International Association of Sports Economists Contact information at EDIRC., North American Association of Sports Economists Contact information at EDIRC.
Bibliographic data for series maintained by Victor Matheson (vmatheso@holycross.edu).