Why do teams wait until the trade deadline to make trades? Is it for the same reason that people snipe Ebay? On Ebay, many bidders place bids in the last few moments before the closing time, a practice called "sniping." There are some very good reasons for doing so, one rational and one slightly irrational, or behavioral.
The rational reason is due to Ebay's lack of anonymity. If you are known as a connoisseur of value, then your participation in an auction signals to the rest of the market that this item deserves extra attention or is perhaps more valuable than you otherwise thought. Therefore it makes sense to wait until the last moment so that no one else can piggyback off of your skills.
The irrational reason is due to Ebay's hard closing time combined with an psychological inability for people to really come up with their indifference prices. An indifferent price is that bid at which you don't care whether you win or lose. The recommended bidding strategy by Ebay is to put in your maximum bid, in other words, your indifference price, and let Ebay automatically increase your actual bid up to the maximum bid as need be to beat other bidders. But if people do not in general put in their best bids, and wait till the end to decide to increase their bid, then you can in general get a better price by waiting till the last few moments to put in your bids.
Both of these reasons apply in some way to the NBA. If you are getting a call from Jerry West about one of your players, the right thing to do is to immediately tell him no, then call up every other GM and say West is interested in your guy. West is known as a terrific evaluator of talent and player ability; he is a connoisseur of value. For him, it is most important to due trades at the deadline.
Yet Memphis didn't move a soul on Thursday. Why not? Partially because the trade deadline is an artificial and temporary halt, not a permanent end. If there was a date after which point a particular player could never be traded again, that would be most similar to the Ebay situation. In this case, West's hypothetical interest (remember we are just using him as a particular example of a connoisseur) would simply carry over into the summer, potentially hurting his ability to get the best deal later.
The irrational reason applies too but to an even greater extent because the decision is not on a continuum like price but among a host of factors such as salary amount and length, other players involved, draft picks, and potential waivers.
Psychologically it is easy to tell if something is a "good deal" or a "bad deal" but it is very hard to find an "indifferent deal." That's even more true when the number of factors exceed simply the price.
The deals of this Thursday, however, don't seem to be the type that fall into the rational category. Everyone knew Baron Davis was being shopped. Everyone knew Chris Webber was being shopped. There was no interference from connoisseurs of value (and one could also argue that in a market of 30 people, each is a connoisseur and is unlikely to change his opinion because of someone else's view).
Why weren't the deals done earlier? In some examples, it's because there was no deal. Antoine Walker was being shopped by the Hawks but they wanted too much from the Celtics, even asking for Al Jefferson at one point. When they finally lowered their request to a draft pick, the deal was consummated right away. So the question is: why did Atlanta wait?
Atlanta waited to get the most dividends it could out of Walker. He brought excitement and some wins, though admittedly not many, to the Hawks. The positive carry of holding on to Walker exceeded the marginal additional value Atlanta could have derived by trading him earlier.
When it comes to free agents, such deals happen at the deadline because they can't happen later (the contract will be expired), and because the acquiring team is not willing to pay the additional extra value it would require to get the player earlier. And the reason they're not willing to do that is because it's hard to trade small things other than cash.
One thing that would fill that gap would be options. If teams could trade options on players, we would see a lot more trades. For example, if Sacramento could have negotiated an option to switch Webber for the three Philly players it got at any point during the season, essentially getting a put on Webber, they would probably have been willing to give up quite a valuable player in exchange purely for that option.
Alas, this doesn't seem to be the way things are done in the NBA. I am not sure if the CBA prohibits it or if GMs are simply uncomfortable selling options on their players, but the situation should be remedied.