Dan Snyder, Richard Thaler, and the End of the RGIII Error

Yesterday's blockbuster announcement that Kirk Cousins would be the Washington Redskins' starting quarterback this season brought a sudden and gloomy end to the era of "RGIII"—former starting quarterback Robert Griffin III.

In the 2012 NFL Draft, Washington wanted to obtain a "franchise quarterback" after two decades of instability at the position. The team's owner, Dan Snyder, highly coveted Griffin, who was coming off a Heisman-winning season at Baylor University. So, at Snyder's urging, the Redskins traded away a passel of high-level draft picks—the team's first-round picks in 2012, 2013, and 2014, plus the second-round pick in 2012—to the St. Louis Rams in exchange for the Rams' first-round pick in 2012.

The Rams were originally to pick second overall in the draft and the Redskins sixth, so all those lost picks (and players) netted Washington just a single improvement of four draft positions. But Snyder thought that RGIII was worth it, and that the team wouldn't be able to obtain a franchise quarterback if they waited until the sixth pick. (Noteworthy: the team took Cousins in the fourth round of that draft, and the Seattle Seahawks took quarterback Russell Wilson in the third round. Wilson, of course, has led Seattle to the playoffs in each of his three seasons, including two Superbowl appearances and one championship.)

And at first, it looked like Washington's decision was a good one. Griffin won the NFL's offensive Rookie of the Year award in 2012 and led the success-starved team to the playoffs. But as that regular season was winding down, he suffered an ugly knee injury in a game against the Baltimore Ravens. He further injured the knee in the subsequent playoff game (which the Redskins lost), requiring grueling ligament reconstruction surgery.

His career since then has been marred by injuries, regression, and benchings. (For an appraisal of Griffin's play, consider former Redskins tight end Chris Cooley's assessment, discussed in this post.) RGIII has clearly not been worth the high price the Redskins paid for him. But how could the team have known that would happen?

In fact, Snyder was told it would probably happen, according to a remarkable passage in University of Chicago economist Richard Thaler's latest book, Misbehaving (W.W. Norton, 2015). Thaler co-founded the field of "behavioral economics"—the study of why people systematically fail to make rational decisions with their resources. In the coming years, he will likely receive the Nobel Economics Prize (which is a sort of "lifetime achievement award") for his work in "B/E."

In 2006, he and one of his students, Cade Massey (now an economics professor at UPenn Wharton), released a paper on the NFL draft, examining whether teams’ management made predictable mistakes in the use of their draft choices. (You can read their working paper here). In a nutshell, their research found that teams systematically overvalue their high-round draft targets and the current year’s draft class. Other teams can take advantage of this, resulting in their gaining more quality players overall, by trading down for more picks and trading current-year picks for multiple future picks.

When they were working on the paper, Snyder visited UChicago’s Booth School of Business to speak at its entrepreneurs’ club. Thaler moderated the event and mentioned to Snyder the research he and Massey were doing on NFL draft strategy.

Thaler recounts what happened next:

I told Mr. Snyder about the project with Cade and he immediately said he was going to send "his guys" to see us right away, even though they were in the midst of the season. He said, "We want to be the best at everything." Apparently when Mr. Snyder wants something he gets it. That Monday I got a call from his chief operating officer, who wanted to talk to Cade and me ASAP. We met Friday of that week with two of his associates and had a mutually beneficial discussion. We gave them the basic lessons of our analysis, and they were able to confirm some institutional details for us.

After the season ended, we had further discussions with Snyder’s staff. Cade and I watched the draft on television that year with special interest that turned into deep disappointment. The team did exactly the opposite of what we had suggested! They moved up in the draft, and then traded away a high draft pick next year to get a lesser one this year. When we asked our contacts what happened we got a short answer. "Mr. Snyder wants to win now."

Thaler is unclear about exactly when this happened, but it wasn't immediately before the 2012 draft. We can make a pretty good guess of when it was, though. The working paper appeared in 2006, so it would have been a draft prior to that—but not too prior. During the 2005 draft, the Redskins traded away their third round pick, plus their 1^st and 4^th round picks in 2006, to acquire the Broncos’ 2005 1^st round pick (#25 overall). With the pick, the Redskins took Jason Candle Campbell. That seems to be the draft maneuvering that Thaler is describing.

Circling back to RGIII, Thaler then writes:

This was a good forecast of Snyder’s future decisions. In 2012 the Redskins had the sixth pick in the draft, meaning they had been the sixth worst team in 2011, and they were desperate for a high-quality quarterback. There were two highly rated quarterbacks available that year, Andrew Luck and Robert Griffen III [sic], who is known as RG3 for short. Indianapolis had the first pick and had announced their intention to take Luck. The Redskins wanted RG3.

He then gives a description of the Rams trade, RGIII’s initial success, his subsequent injuries and disappointments, and mentions Wilson's success.

Thaler concludes the tale:

Of course, one should not judge a trade using hindsight, and the Redskins were certainly unlucky that Griffen [sic] suffered from injuries. But that is part of the point. When you give up a bunch of picks to select one player, you are putting all your eggs in his basket, and football players, like eggs, can be fragile.

He goes on to say that he’s also consulted with other NFL teams on drafting. They applied his ideas better than Snyder did, but in many cases they still din not apply them well, often treating the additional picks as "house money" that were then used in questionable ways. On that note, consider the poor return St. Louis received from its Washington draft pick bonanza.