Trade Down: A Value Analysis

Nobel prize winning economist says teams get better value by trading down
.... study shows that teams overvalue early draft picks. "We find that top draft picks are significantly overvalued....."

Richard Thaler, who changed thinking about the NFL draft, wins Nobel Prize in economics
https://profootballtalk.nbcsports.com/2017/10/09/richard-thaler-who-changed-thinking-about-the-nfl-draft-wins-nobel-prize-in-economics/
" .... multiple psychological factors shows that teams overvalue the chance to pick early in the draft. Using archival data on draft-day trades, player performance we compare the market value of draft picks with the surplus value to teams provided by the drafted players. We find that top draft picks are significantly overvalued in a manner that is inconsistent with rational expectations and efficient markets ....."

"The Loser's Curse: Overconfidence vs. Market Efficiency in the National Football League Draft."
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=697121
https://repository.upenn.edu/oid_papers/170/

Of course if you think you might have an all-pro QB then it's worth it to trade up.
Or if you have a sure-fire all-pro WR or CB or DL etc then you should trade up.
But usually you get more value trading down

Trade Down or Up: A WR Value Analysis

Wide Receivers in the first round have a poor draft history. About 1/3rd of 1st round WR's are busts historically. Only about 15% make all-pro and only 30% make a pro-bowl. So it's very risky picking 1st round WR's

Bust Rates for NFL Draft:
https://bleacherreport.com/articles/2441018-which-positions-are-the-safest-riskiest-at-the-top-of-the-nfl-draft

Statistical analysis to estimate the value of a trade down scenario:
Say we trade down ten spots from #13 (1150) to #23 (750) = gain 400 draft value points. With that for #13 we could get #23 + #60 + #100 (depending on which chart they use) https://www.drafttek.com/NFL-Trade-Value-Chart.asp

If we stay at #13 lets estimate that:
The rd 1 #13 WR (eg. Ruggs) has a 40% chance (at best) to be a pro-bowler, 40% of being very good and 20% chance of bust.

If we trade down and picked WRs, these are the types of players that will be available in a very deep WR draft:
Rd 1 #23 WR (Jefferson or Mims, etc) has a 30% chance of being pro-bowler, 45% of being very good and 25% chance of bust.
Rd 2 #60 WR (Claypool / Peoples / Pittman / Edwards / Tee Higgins? etc) has a 25% chance of being pro-bowler, 40% of being very good and 30% chance of bust.
Rd 3 #100 WR (Antonio Gibson, Claypool / Pittman / Edwards) has a 20% chance of being pro-bowler, 50% of being very good and 30% chance of bust.
So in this scenario we'd get Jefferson at #23, Claypool at #60 and Gibson at #100 in return for our #13 pick (eg. Ruggs). Of course not all of them will be available, but several good WR's will be.

Probability analysis shows that with the trade down we would have these approx. statistical odds:
~60% chance of at least one pro bowl WR
~97% chance of at least one very good WR
~80% chance of at least two very good WR's
~20-25% chance of two pro bowl WR's etc

Whereas if we just picked one WR at #13, our odds of success would be much lower
35-40% chance of getting one pro-bowler
75-80% of one very good WR
0% ZERO chance of two (or more) very good or great WR's

Of course we wouldn't pick three WR's, but it shows the enhanced value of the picks received when trading down.

Success or Bust? An Analysis of Draft Position and NFL Success
https://fisherpub.sjfc.edu/cgi/viewcontent.cgi?article=1064&context=sport_undergrad
……. Wide receivers drafted in the middle rounds …. often have more successful careers than those drafted in the first and second round. More specifically, there is a high bust rate and low success rate with 1st round WR's

Bust Rates for NFL Draft:
https://bleacherreport.com/articles/2441018-which-positions-are-the-safest-riskiest-at-the-top-of-the-nfl-draft
https://www.hogshaven.com/2019/3/23/18185344/the-statistical-argument-for-trading-down-in-the-draft

I buy the overconfidence effect to some degree but overall don't buy the argument that the trade value chart is grossly distorted and NFL teams are dumb.

Did you read the Thaler article you posted? He was referring to high draft picks being overpaid relative to their contracts under the old CBA (when top 10 picks were paid way more than they are today in a league where the salary cap was much lower).

Once a new CBA was negotiated, high draft picks became a lot more valuable because their contracts became significantly cheaper. Before the new CBA, I completely agree with Thaler that you were better off trading down if you could.

Your probabilities are also completely made up and likely to be extremely far off. A WR picked at #100 probably has a 30-40% chance of developing into a capable NFL starter and a 60-70% chance of being a backup or dropping out of the league. Thaler found the sweet spot for draft value to be in the second round where players still had a good shot at being starters. 100 is a 3rd round comp pick with a very small chance of being a pro bowler. The top tier of WRs in this draft have a much higher chance of being at least good players than a 2nd tier WR (it's not 80% to 75%).

The other issue with your approach (and I know this was just for illustration) is that you can't combine probabilities as if they are independent. We don't have the roster spots to add 3 more WRs let alone the opportunities to give them. Teams with bad rosters are better off hoarding draft picks because they have more roster spots and snaps to give them.

The AV chart is interesting in the last link, but a more interesting metric would look at value above a replacement level player (would be more difficult to do this in the NFL than NBA). If a 1st round pick has 3-4x more AV than a 3rd round pick, they're potentially 10x as valuable. This stat also falls apart for several positions like OL and CB where the OL calculation is based on team success and starts (with a modifier for pro bowls/All Pros) and some of the best CBs don't put up big stats because they don't get targeted.

I'm still fully on board with trading down, especially from #13 and if we want a WR because I don't feel like the WRs in this draft are likely to be the BPA at 13. If we think a guy like Andrew Thomas can play guard, I'm also fine staying at 13 and think we can get as much value there as by trading down.

I think nfl teams over value draft picks and trading a proven player for a draft pick is tremendous value considering the bust rates of the draft picks.