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The Sunk-Cost Fallacy in the National Football League

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  • Quinn A. W. Keefer

Abstract

The National Football League (NFL) draft is used to examine the presence of the sunk-cost fallacy in teams’ playing time decisions. In the NFL, salary cap value represents a significant sunk cost to teams. We use the structure of the NFL draft to conduct a fuzzy regression discontinuity design. Optimal bandwidth local linear results suggest a 10% increase in salary cap value yields an additional 2.7 games started, for players selected near the cutoff between the first two rounds. Despite being no more productive, the first round selections receive a compensation premium, which leads to them starting significantly more games.

Suggested Citation

  • Quinn A. W. Keefer, 2017. "The Sunk-Cost Fallacy in the National Football League," Journal of Sports Economics, , vol. 18(3), pages 282-297, April.
    • Handle: RePEc:sae:jospec:v:18:y:2017:i:3:p:282-297
    DOI: 10.1177/1527002515574515
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    References listed on IDEAS

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    Cited by:

    1. Quinn Keefer, 2021. "Sunk costs in the NBA: the salary cap and free agents," Empirical Economics, Springer, vol. 61(6), pages 3445-3478, December.
    2. Quinn Keefer, 2015. "Performance Feedback Does Not Eliminate the Sunk-Cost Fallacy: Evidence From Professional Football," Journal of Labor Research, Springer, vol. 36(4), pages 409-426, December.
    3. Keefer, Quinn A.W., 2019. "Decision-maker beliefs and the sunk-cost fallacy: Major League Baseball’s final-offer salary arbitration and utilization," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    4. Jeff Hobbs & Vivek Singh, 2022. "The endowment effect and the trading of draft picks in major professional U.S. sports," Economic Inquiry, Western Economic Association International, vol. 60(4), pages 1929-1942, October.
    5. Brian D. Volz, 2017. "Race and Quarterback Survival in the National Football League," Journal of Sports Economics, , vol. 18(8), pages 850-866, December.
    6. Steven Salaga & Brian M. Mills & Scott Tainsky, 2020. "Employer-Assigned Workload and Human Capital Deterioration: Evidence From the National Football League," Journal of Sports Economics, , vol. 21(6), pages 628-659, August.
    7. Quinn A. W. Keefer, 2019. "Do sunk costs affect expert decision making? Evidence from the within-game usage of NFL running backs," Empirical Economics, Springer, vol. 56(5), pages 1769-1796, May.
    8. Hackinger, Julian, 2019. "Ignoring millions of Euros: Transfer fees and sunk costs in professional football," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    9. Nikos Chatzistamoulou & Kounetas Kostas & Antonakis Theodor, 2022. "Salary Cap, Organizational Gap, and Catch-up in the Performance of NBA Teams: A Two-Stage DEA Model Under Heterogeneity," Journal of Sports Economics, , vol. 23(2), pages 123-155, February.
    10. Quinn Andrew Wesley Keefer, 2021. "Did the 2011 Change to NFL Rookie Compensation Alter How Sunk Costs Affect Utilization?," Journal of Sports Economics, , vol. 22(4), pages 387-411, May.
    11. David C. Phillips, 2017. "Stopping on Nine: Evidence of Heuristic Managerial Decision‐Making in Major League Baseball Pitcher Substitutions," Southern Economic Journal, John Wiley & Sons, vol. 84(2), pages 577-599, October.

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