Monday, November 20, 2006

What are you maximizing?

This article on American football argues that managers are not rational because they too often pick famous has-beens, instead of obscure (but highly talented) rookies.
The Washington Redskins are perhaps the leading exemplar of this tendency toward irrationality. Last spring, for example, the Redskins gave up key draft picks for high-priced veteran players. An especially silly trade gave the Jets three RedskinsÂ? picks: in the second and sixth rounds this year and in the second round next year. The trade left the Redskins with only one pick in the first three rounds this year.

To compound this error, the Redskins filled their roster with mediocre, high-priced veterans, dropping $35 million on safety Adam Archuleta, $32.5 million on defensive lineman Andre Carter, $31 million on wide receiver Antwaan Randle El, and $25 million on wide receiver Brandon LloydÂ?none of whom has ever been in the Pro Bowl.
The article claims that bad management is an output of irrationality combined with a lack of competition. Yes, the Redskins are poorly managed, but what does it matter since no competitive team can come to take their place.

A more robust treatment of economic rationality would at least explore the idea that the managers are maximizing something other than having a winning team. What about having famous names on the roster? That may bring in fans as well, or at least, make the coaches and managers happy. It may be rational to spend (other people's) $$$ on big name players who are not worth it if you then get to hang out with big name players.


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