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In response to "Interesting. Reasons include (I speculate): Finite # of draft picks v. larger pool of undrafted free agents, and the economic consequences of whiffing" by rollo

I think it's more that teams tend to draft 1st and 2nd round picks on potential and talent whereas undrafted free agents...

...are guys who fit the team's philosophy and/or fill a specific need with their talent. Plus, there are some roster positions kicker, snapper, punter that are almost exclusively filled by undrafted free agents.

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