March 19, 2015

The Quinton

Depth, Insurance, and Filling Out a Roster

by Jeff Quinton

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With the positional series now over (may its soul find peace in the afterlife and archives), we will now write about other things. More specifically, we should and will discuss the back end of drafts and auctions. While the decisions we make at these junctures will not be the most impactful decisions we make in a draft/auction, they are decisions in which we often leave value on the table. When it comes to choosing final roster spots, particularly bench players, we often hear about drafting/buying “insurance for our closer” or “risky Player X insurance,” which makes sense (at first blush) regarding the imperfection of our ability to forecast player production. The issue is that what we choose to insure is not always derived from (good) reason. Nassim Nicholas Taleb writes in Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets,

“As a derivatives trader I noticed that people do not like to insure against something abstract; the risk that merits their attention is always something vivid.” (Pg. 37)

As to why this is “noticed” or observed, Taleb continues,

“our brain tends to go for superficial clues when it comes to risk and probability, these clues being largely by what emotions they elicit or the ease with which they come to mind. In addition to such problems with the perception of risk, so a scientific fact, and a shocking one, that both risk detection and avoidance are not mediated in the “thinking” part of the brain but largely in the emotional one (the “risk as feelings” theory). The consequences are not trivial: It means that rational thinking has little, very little, to do with risk avoidance.” (Pg. 38)

(Note: I do not share such certainty about the truths of the world/human brain as Taleb, but regardless of the exact cause, I do agree with the consequences observed.)

The reason for this quote and previous combination of words is that what we worry about in fantasy baseball often has little to do with projecting actual value. As a result, we often err in the backups and depth we select. We will now take a look at how we err when it comes to the risk avoidance we select and how we can do better.

“Not like this…Not like this.” —Switch

The above quote can be attributed to a fictional movie character that was about to die. Overacting and writing aside, it speaks to how our brains work, in that we are often drawn to value the how when the what is all that matters. Instead of worrying about all loss, we worry specifically about the recent and vivid—that which the “emotional” part of our brains feels the most. Below are some ways these fears manifest themselves in fantasy baseball:

• Players who have been injured recently
• Players with uncertain roles
• Players coming off of down seasons (especially older players)
• Pitchers moving to hitters’ parks and hitters moving to pitchers’ parks

There are definitely other examples, but the motivating factor is the same for all of them—that which we can easily imagine failing is that which we are most worried about.

While this seems like a non-issue, the problem is that whenever we overweight anything, we are consequently underweighting something else. In the case of choosing players for our benches, in choosing which players we should “insure” first, we tend to underrate the mundane; we tend to underrate base rates. For example, while our starting catcher may carry more risk than any of our five starting outfielders, we are more likely to have to replace an outfielder than the catcher because their combined risk (the risk of one of them needing replacement) is greater than the catcher’s individual risk. However, we often see such owners reach to insure their risky catchers before taking their first backup outfielder (one which they probably do not need to reach for and a player who could probably be traded for an even better catcher if needed).

Reframing Roster Insurance

While it is good to point out the ways we tend to err in choosing how we insure the risk on our roster, it is even more important to note that framing these decisions through insurance is often a faulty premise. Care to elaborate? Yes. For starters, insurance does not actually exist in fantasy sports in that there is no guarantee that your insurance will be healthy or productive when it is needed. Consequently, what we really need from our late-round picks is—you guessed it—value. Why? Because the better the players on your bench, the more likely you will have the currency needed to fill any hole. Using the catcher/outfielder example from above, we can hypothesize that the outfielder that we would not have to reach for can probably return a better catcher than the catcher we could have mistakenly reached for (just another reason to lean towards taking the best player available).

This strategy would work best in a perfect market or at least a league with a healthy trading culture. However, many leagues have little to no trading. In this scenario, we are back to the base rates and trying not to overweight specific, visible risks from above. It is in this situation that knowing your league becomes even more critical; specifically, knowing how available replacements at each position tend to be throughout the season.

Again, we are not figuratively turning the tables here. Rather, by being a little smarter about how we fill out the bottom of our rosters (especially bench spots), factoring in value as well as the more mundane risks, we can improve our odds in each draft and auction.

Sources:

Taleb, Nassim Nicholas. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. 2nd ed. New York: Random House, 2005. Print.

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