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The NBA Draft

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  • Barbara Arel

    ()
    (School of Business Administration, University of Vermont, Burlington, VT, USA)

  • Michael J. Tomas III

    (School of Business Administration, University of Vermont, Burlington, VT, USA)

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    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.

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    Bibliographic Info

    Article provided by in its journal Journal of Sports Economics.

    Volume (Year): 13 (2012)
    Issue (Month): 3 (June)
    Pages: 223-249

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    Handle: RePEc:sae:jospec:v:13:y:2012:i:3:p:223-249

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    Related research

    Keywords: human capital; option value; NBA; early entry;

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