When do you think sports franchises will break out of the "We need to him put butts in seats!" mindset and realize that winners are the only things that put butts in seats?Simmons explains overbidding as a tactical error, but perhaps a simpler explanation could be found in human psychology. Loss aversion posits that individuals will be more averse to losing an item than they would be excited about gaining that same item. Why can't we apply it to the contract decisions of sports teams?
One way to test this hypothesis would be to see whether new GMs who did not sign the player themselves are more likely to let a player go than an long-tenured GM who actually signed or drafted the player himself. If an old GM is more likely to go to all ends to resign a player than a new GM, that would be evidence for loss aversion. Also, teams that rely on pure metrics might be less likely to fall victim to this problem than teams that rely on their "gut instinct," but that would be harder to quantify.
What do you think of the new science of "behavioral sportonomics?"