The Quinton: Valuing Disappointing Players

On their most recent podcast, the fine peoples of There Is No Offseason (TINO) discussed the values of Jeff Samardzija and Brett Lawrie. For the most part, these players have performed below expectations. It can be and often is said that many of us have been burned by these types of players (highly variable with considerable albeit low-likelihood upsides) failing to meet expectations. There is a flaw in that statement though. We are usually not burned by these players failing to meet expectations, but rather by our inaccurate expectations. The difference in these statements is the frame, and this is not unexpected given that we are people. People like to be right and, more than that, we like believe we are right most of the time. When we are wrong we need a way to cope with this intrapersonal conflict. A favorite of ours is to blame the situation or external factors. In this case, it is easier to blame the player than the decision-maker (us).

For the most part this solution works great: We get to feel better by blaming someone else and that someone else (a professional baseball player) never even knows that we blame them for a poor result for someone participating in fantasy baseball. Cool? It is probably not going to be cool. Why? Because in choosing to find nothing wrong with our process, we are more likely to make the same mistake again and again. Assuming we want to avoid making the same mistakes in the future, we will now take a look at how we can improve at forecasting production for players with considerable upside that will most likely continue to “disappoint.”

In theory, properly forecasting and making decisions regarding this type of player should be no different than doing so for more consistent players: Place probabilities and values on all potential outcomes, adjust for scarcity or any other variable, and then rank/assign auction values. When it comes time to pull or not pull the trigger on these players, though, we often end up passing on them even when we know the price is right and reaching for them even when we know we are overpaying for an unlikely result. There are a bunch of reasons that we do this; we’ll take a look at them below:

The recently discussed ambiguity effect—a cognitive bias that shows our preference for more certain odds to less certain odd—can often cause us to avoid more volatile players. In the previously mentioned podcast, young person Ben Carsley said something to the effect of, “He will probably have one great season over the course of this [five-year] deal, but I have no idea which one it will be.” Carsley also said the same line of thinking applies to Lawrie. I, and I am guessing many others do as well, agree. By avoiding this uncertainty altogether we will be right four out of five times. The cost of total avoidance, however, is that we will miss opportunities where the risk becomes worth the reward. In other words, that one great year carries some amount of value, and completely ignoring it will cause us to undervalue such players.

Beyond the ambiguity, expectations and context also matter. From prospect theory, we know that people allow their expectations for a decision to influence how they choose among risky options. When our options are below our expectations, we reach for upside and when our options above our expectations, we settle for the safest option. Put differently, we reach for the Brett Lawries of the world when we feel that settling on a more consistent second-base option is not going to allow us to compete, and we avoid them when we feel like any production we get from our middle-infield slot is icing on the cake of an already great team. We particularly do this with player mix, choosing safer players if we feel as if we have a more volatile base or vice versa, but this is probably a misunderstanding of the benefits of diversification. Again, instead of doing our best to give as accurate a valuation as possible and make decisions accordingly, we search for external factors to give us an out from a complex decision.

Lastly, and we have said this before, decision-making history matters. On the one hand, the advocacy effect, by making our opinions on things we advocate for (usually to justify decisions to ourselves) stronger over time, makes us more likely to repeat past decisions. On the other hand, our risk-averse nature makes us unlikely to eat the same berries that previously made us sick. And on a third hand, the disposition effect, which shows the tendency of investors to keep their losers too long and sell their winners too quickly, would indicate that we might be more likely to continue to invest in players that burn us, hoping to recoup our losses, while avoiding risky players that have paid off for us in the past in order to “cash in.” Again, we are weighing variables that will adversely affect our decisions.

There are a lot of obstacles to navigate in this particular decision-making sea. Understanding the obstacles is the first step to help us avoid them, but we need strategies beyond reading words on the internet. More than anything though, we need to keep asking ourselves if we are choosing the player with the highest expected return—that is, if we are making the best bet possible. Expected value does not change during 99 percent of circumstances in fantasy baseball (except if we run out of starting roster spots); thus, it can be helpful to ask ourselves, “Would I be making this decision if I had a different roster? Would I be making this decision if I did or did not select this player last year?” If we can get ourselves to frame our decisions this way, then we have a chance of helping ourselves strip out unimportant variables. We will still get burned by volatile assets and a probabilistic future, but the less we can get burned by our flaws in dealing with volatile assets and a probabilistic future, the bigger advantage we will gain over our competition.