July 31, 2014

Fantasy Freestyle

Trade Deadlines and Systems of Thought

by Jeff Quinton

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Good whatever time of the day you are reading this; more importantly, good almost trading deadline. At this point, you are all familiar with my love of the work of Daniel Kahneman and Amost Tversky as well as my love of Kahneman’s very excellent Thinking, Fast and Slow. Up to this point, when my articles have involved their work, they have been regarding the thinking part rather than the fast and slow part. This has not been unintentional because in fantasy baseball we almost always have time to analyze every decision we make; thus, we almost always get to avoid thinking fast or System 1 thinking as Kahneman describes it. One of the exceptions to this particular “almost always” is your league’s trade deadline. In some leagues, there is a flurry of activity right before the deadline and thus a flurry of System 1 thinking.

This very moment seems like a great time to explain System 1 and System 2 thinking. Kahneman calls System 1, “the brain’s fast, automatic, intuitive approach” and System 2 “the mind’s slower, analytical mode, where reason dominates.” The former is great for making life more enjoyable by lowering the cognitive burden of living in such a complex world. In other words, System 1 is great for quickly and effortlessly making decisions of little consequence. When deciding which parking space you should park in or whether to go with Regular or 100% Colombian at Wawa (#regular4life), System 1 is the perfect system for the job. In fact, using System 2 for these types of decisions would be exhausting. That said, System 1 has many problems for navigating complex problems in that it is affected by biases, finds connections that do not exist, makes counterproductive associations, jumps to conclusions, and chooses the less cognitively difficult path instead of the optimal path. Conversely, System 2 is the better system for making important, difficult decisions. System 2 is not perfect for such instances, but it is the best we have and it is much better at overcoming many of the obstacles presented by System 1. The catch with System 2, however, is that it requires a certain amount of time.

That, folks, concludes my explanation of Kahneman’s System 1 and System 2 thinking. As we head toward our respective leagues’ trade deadlines, it becomes apparent that we are also heading towards a predicament. The predicament being that we would prefer to use System 2, but we may not have the time necessary to fully use it. I find the best way to overcome such a predicament, should it occur, is to do the System 2 thinking preemptively. In other words, imagine the System 2 thinking you might have to and want to do at the deadline, and then do such thinking and analysis before heading into the trade deadline. How do we do so? I have laid out some hopefully helpful tips below (you have heard some of these tips from me before, but they are valid here and just as useful):

1. Know your biases and tendencies
Firstly, we are likely to repeat mistakes that we have made before. What deals did you make in the past that did not work out? What deals did you make in the past that worked out, but in which you were lucky (bad bet/lucky outcome)? What deals did you pass up on that you should not have?

Secondly, we are likely to try to repeat what worked in the past. When decisions are tough, sometimes the simplest and least insightful of reasons, such as “it worked last year,” can convince us to take improper action. This is an issue because we know that past success does not ensure future success. Do not let System 1’s desire to take a cognitively easier path get in the way here. Try to fall back on successful process more that successful results. What does this mean? It means (in example form), do not trade for a closer just because trading for Koji Uehara worked out very well last season. Instead, trade with an owner undervaluing a specific position (closer) or player type (old), which might be for a closer this year, but which might also be something entirely different.

2. Know your needs
In redraft leagues, your needs will depend on whether you are in a points or a rotisserie league. In a points league, all that matters is that a trade increases the number of points you score each week or in the playoffs depending on your situation. In a roto league, all that matters is that a trade either helps you gain points or prevents you from losing points (it can also matter if it prevents your opponents from gaining/not losing points, but closing off a single option often does not prevent this).

In keeper leagues, your needs will depend on whether you are buying or selling. If you are buying, you need to pay attention to your needs as well as competitive response. There is no longer a point in trading for value to then be better able to trade for need because time is up. If you are selling, you need to pay attention to your window of opportunity. If a trade improves your chances of winning in that window then the trade should be made unless an even better trade is available.

3. Know your opponents’ tendencies and needs
Again, the point here is to try and do as much preemptive analysis/System 2 thinking upfront as possible. If you can anticipate what others might be thinking then you can minimize the amount of System 1 thinking you might need to do at the deadline. The key here is not to assume that your leaguemates are perfectly rational or, more importantly, that they think like you. In understanding how they typically act, combined with their needs (or more importantly, what they perceive their needs to be), you have a better chance of getting out ahead of the limited time/System 1 trap.

4. Analyze the market
Analyzing the market is essentially analyzing the interaction of the previous three tips. Beyond knowing who is selling, who is buying, and which teams make logical trading partners, knowing how the market might shift after a given trade is completed is also helpful. In other words, when Team X predictably sells their closer to Team Y for a prospect q5 minutes before our league’s trade deadline, we need to know how to properly adjust our asking prices and desired returns. The better we can do that, the more likely we are to make a beneficial trade.

5. Check your assumptions
(Here Jeff goes with the assumptions again.) Trying to predict what is going to happen is a nice start, but things might happen that you do not expect to happen. To see how you might be surprised, start with your assumptions. I have given the “check your assumption” advice many a time because it is incredibly important in strategic decision-making. In short, we make bad decisions not because of bad information or limited mental ability, but rather because of bad assumptions. If we know our assumptions heading into the deadline, as well as the outcomes should our assumptions be incorrect, then we will be more prepared to act on our feet.

6. Do not be overly risk averse
When a flurry of trades is made or even when a flurry of trade talk occurs, it is natural for us to step away from the situation all together. This is a time when many a beneficial trades do not get made because when there is not enough time to fully analyze a decision we have no other decision making process that we feel comfortable using. This is not a bad practice, but it is not the best practice. Yes it will ensure that you do not make a bad trade, but it will also ensure that you do not make a good trade, and both can hurt your team equally. When time is of the essence, go back to your needs, try to do the analysis you find most critical, and then do the best with what you have. It is far from perfect, but do not let perfect get in the way of good or better, especially when the alternative is walking away from a beneficial trade.

Good luck, and enjoy both your and MLB’s trade deadlines.

Source:

Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011. Print.

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