July 10, 2014

Fantasy Freestyle

League Norms and Trade Markets

by Jeff Quinton

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Many a fantasy baseball player is trying to make a trade right now. Many trades will be made that should not have been made. Many trades will not be made that should have been made. League norms, while usually helpful, can play a role in distorting fantasy baseball trades and trade talks. More specifically, league norms often cause us to make trades outside of what the market dictates. Again, this can cause trades that should be made to go unmade and trades that should not be made to be made. We will take a look at league norms and how they impact trades. We will then look at what we can do about it.

League Norms:
I am usually all into books and journal articles and stuff, but sometimes good ol’ Wikipedia has just what the internet writer ordered:

“A norm is a group-held belief about how members should behave in a given context. Sociologists describe norms as informal understandings that govern society’s behaviors, while psychologists have adopted a more general definition, recognizing smaller group units, like a team or an office, may also endorse norms separate or in addition to cultural or societal expectations.”

As you have astutely guessed, each league has its own norms. Just as society’s norms dictate who we are willing to give our public transportation seat to, just as company norms dictate whether meetings start on time or five minutes late, our league norms will often dictate or at least influence the types of trades we make, the timing of the trades, as well as many other trade related and unrelated decisions. Norms, in general, are great; however, there are times when norms get in the way of optimal decision-making. Let us take at a look at both the good and the bad.

The Good:
Like heuristics, norms help us subconsciously or less consciously make the many decisions we have to make throughout the day; essentially, norms help to lower our cognitive load, which would be unbearable if we had to fully analyze, from scratch, every decision we make. Norms also help groups to function more efficiently. For example, when you extend your hand to another party and say, “Hi, my name is Pat,” norms indicate to the other party that you are interested in conversation or at least an introduction, that you would like to know their name, and that your name or preferred nickname is most likely Pat. This is helpful because otherwise a stranger might interpret such a movement as a sign of aggression or a disrespect of personal space. Similarly, in our fantasy baseball leagues, norms help us to begin trade talks and structure trades. If you have ever played in a free, internet league with strangers, then you have probably experienced the downsides of the absence of league norms. In these leagues, ridiculous trade offers are sent off into the abyss and trade talk is nonexistent or not constructive. By looking at this alternative, we can see how norms help our leagues operate more efficiently. League norms seem pretty rad at this point, but of course there is always a downside.

The Bad:
Norms tend to be built around normal or “most common” trade markets. Consequently, norms often lose their helpfulness when we face abnormal or uncommon trade markets. This means that when we face an abnormal trade market (which we probably face more frequently than we think), norms will get in the way of properly adjusting decision making to the new, abnormal market. Norms will do so mainly in two ways: precedent and fairness.

Precedent:
The league norm regarding how owners use precedent in making decisions will vary from league to league. In most leagues, though, most owners are really only comfortable making trades that resemble something similar to a previous trade. In normal markets, where there are a handful of both motivated buyers and sellers, using precedent works because most previous trades were made in normal markets. Consequently, leagues will follow norms and precedent year after year. Wait until the usual time, say the end of June, wait for a contender’s player to get injured, and trade that owner an expensive, productive player for a promising prospect. This is a perfectly rational precedent to follow, but only when the conditions are right. What happens when there are not any motivated sellers? What happens if the motivated buyers have nothing to sell? What happens if there is only one buyer? What happens when we face an abnormal trade market?

When we face an abnormal market there are two common outcomes: (1) trades are made as if the league is facing a normal market and (2) trades are simply not made. Regarding the first outcome (ignoring the abnormal market), owners might adjust slightly to the market, but generally do not completely adjust. This can therefore be used to your advantage. If you are a buyer in a sellers’ market, then make sure to see if any of the sellers have not completely adjusted to the abnormal market before looking for a fair trade per market conditions. Regarding the second outcome, do not let abnormal market conditions deter your from trading. If you are a buyer in a sellers’ market where all the sellers have adjusted to the abnormal market conditions, then do not be afraid to give up more than precedent dictates in order to acquire the pieces needed to make a meaningful run at first place. In other words, do not let what is fair per precedent get in the way of what is reasonable per the market, unless you can still get “precedent-pricing” or the abnormal market no longer leaves you with any favorable trades. This has brought us to our next point, fairness, rather nicely.

Fairness:
As discussed mere sentences ago, our views on fairness play a role on the trades we make. It is obvious, but the extent to which fairness is ingrained in us and the extent to which it affects our decisions is probably understated. For starters, fairness is probably not a product of human society, but rather a part of our hardwiring. How deep does this go? Even primates have a sense of fairness ingrained in them. Check out how this capuchin monkey reacts to a perceived injustice.

A reasonable line of questioning at this juncture would be, “What is wrong with fairness? Should not we be only agreeing to fair trades anyway?” Yes, you should only be agreeing to fair trades, that being fair trades per market conditions so long as more favorable trades are not available. The problem with many a league norm regarding fairness is that fair does not often mean fair per market conditions. Instead, fair means fair per precedent or fair per league norms. Often this means that owners will use these definitions of fairness (per league norm) as a reason to reject offers that reflect abnormal market conditions. In this instance, there is really not that much to do. Our sense of fairness is so deeply ingrained in us that reason or explanation is not going to change our minds. The best thing we can do is not waste time and energy on battling league norms regarding fairness. Instead, we should try to use the norms to our advantage and if that is not possible, then we might just have to accept and act within league norms in order to get something done.

There is one last point I would like to make that does not really fit into a category, and that point is on the dynamic nature of trade markets. I am not saying anything new when I say that trade markets are dynamic. However, I do think that how we (owners/humans) handle shifts and future shifts in trade markets is worth noting. This also ties in with norms, precedents, and fairness. To get to the point, timing does not matter only in the buy low-sell high sense, it also matters in the perspective sense. The “perspective sense” is the idea that we do not only weigh current market conditions when making decisions, we also often weigh past market conditions and sometimes even future market conditions.

This leads to two common mistakes: (1) beneficial trades get rejected because a different owner previously got a better deal and (2) a trade gets made when waiting could have netted a greater return in a future, more beneficial trade market. The first mistake is the most common mistake; it allows us to use precedent, fairness and sunk costs as a reason to avoid making a trade. Again, we should be focused on current and future market conditions when making trades and definitely try to ignore sunk costs (much easier said than done though). The second mistake is tougher to measure and act on because it is often difficult to predict future market conditions. If we can somewhat accurately predict future trade markets, then we will better know when to engage in trades (also much easier said than done). What can be learned from all of this is that it is important to keep the pulse of the trade market as well as league norms at all times. This is an attainable feat and in doing so, we can better understand our own behavior and our leaguemates’ behaviors during trade season, which is often the difference between making a beneficial trade and sitting on the sidelines.

Source:

"Norm (social)." Wikipedia. Wikimedia Foundation, 07 Sept. 2014. Web. 09 July 2014.

Jeff Quinton is an author of Baseball Prospectus. Follow @jjq01
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