The NBA Draft

Barbara Arel and Michael J. Tomas

Journal of Sports Economics, 2012, vol. 13, issue 3, 223-249

Abstract: The National Basketball Association (NBA) has a fixed salary schedule that allows us to examine this labor market to understand the incentives for players to enter the draft. Previous studies have focused on labor as a choice from the team’s perspective. Early entry into the NBA draft is similar to the decision to exercise an American style put option early; the draftee sells his remaining time in college early. Using mock draft and actual draft data, the authors find early exercise to be rational for all class ranks; though the early exercise boundary is considerably different for freshmen and juniors.

Keywords: human capital; option value; NBA; early entry (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:13:y:2012:i:3:p:223-249

DOI: 10.1177/1527002511406128

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