Escalation Effects and the Player Draft in the AFL

Posted: 6 May 2016  

Jeff Borland

The University of Melbourne - Department of Economics

Lee Leng

University of Oxford

Robert D. Macdonald

University of Melbourne - Law School

Date Written: 2011

Abstract

This study investigates escalation effects in the Australian Football League (AFL). We use a sample of players selected in the AFL player draft (National Draft) between 1986 and 2002, and test for escalation effects by examining whether a player’s draft order affects his subsequent utilisation by the club to which he was drafted. Utilisation is represented with measures of games played and tenure. Limited evidence of an escalation effect is found. Any relation between a player’s draft order and his games played and tenure at the club to which he was drafted is concentrated in the early years of his career, and this apparent relation can be explained by the information about a player’s ability that is contained in the player’s draft order and by incentives for clubs to provide greater playing experience to higher ability players. Escalation effects in the AFL competition are therefore much weaker than have been found in studies of the US National Basketball Association (NBA). It is suggested that differences in the structure of the competitions may explain why the escalation effect in the AFL would be weaker than in the NBA.

Keywords: Escalation Effect, Sunk Cost, Player Draft, Career Concerns, Australian Rules Football

JEL Classification: D01, J40

Suggested Citation

Borland, Jeff and Leng, Lee and Macdonald, Robert D., Escalation Effects and the Player Draft in the AFL (2011). Labour Economics, Vol. 18, No. 3, 2011. Available at SSRN: https://ssrn.com/abstract=2650398

Jeff Borland

The University of Melbourne - Department of Economics ( email )

Victoria 3010, 3010
Australia

Lee Leng

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Robert D. Macdonald (Contact Author)

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

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