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Abstract
This article explores the dilemma of choosing talent using NBA data from 1987 to 2003. We find there is much uncertainty in selecting talent. If superstars are found, they are usually identified early. However, more false positives exist than correct decisions with high draft picks. Our results suggest the dilemma of choosing talent is not so much a winner's curse but more like a purchase of a lottery ticket. Most times you lose, but, if you are going to win, you must buy a ticket.
Notes
1The value of the test statistic is 6.5239. This is greater than the critical value at the.005 level of significance given the degrees of freedom.
2See Stata Release 6, Reference SU-Z pp. 438–9 for details or Greene (Citation1990), pp. 572–3.
3The last season used in this regression analysis, 2002–03 season was selected to avoid any selectivity bias that might have occurred from too many young high school players jumping into the league prior to the imposition of the 19-year-old rule and individual salary cap negotiated into the latest NBA agreement.
