The Dilemma of Choosing Talent: Michael Jordans are Hard to Find

Abstract

This paper explores the dilemma of choosing talent using NBA data from 1987-2003. We find that there is much uncertainty in selecting talent. If superstars are found they are usually identified early, however, more false positive exist than correct decisions with high draft picks. Our results suggest that 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 one.