July 24, 2014

Fantasy Freestyle

Sustained Success and the Red Queen Hypothesis

by Jeff Quinton

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While I have been providing mid-season strategy articles of late, I came across the Red Queen effect the other day and began thinking about its impact on fantasy baseball. As a result, this article holds relevance throughout the entire season (maybe more so in the offseason), but does not hold specific relevance to this point in the season.

I am most likely a better fantasy baseball player today than I was two years ago. You are most likely a better fantasy baseball player than you were two years ago. Anyone who has been playing fantasy baseball for some amount of time is probably better now than they were before. If we are all improving, then getting better is helpful in that we do not fall behind, but it does not necessarily get us ahead. And that, kiddos, is the kicker. In other words, improving yourself and gaining an advantage are two very different things. In order to consistently succeed, we need to both improve and gain an advantage, but competition makes this inherently difficult. We will take a look at why it is difficult to sustain success and if anything can be done to overcome those difficulties.

The first difficulty we face is in how we behold success. We like to think of success as the result of abnormal character traits or the end product of some master plan. Both of these thoughts fail to take competitive response into account. In other words, long-term success in competitive situations is usually not the result of either case because competition is often quick to adapt to our competitive advantages and long-term plans, rendering them not advantageous. We either see successes rise and fall or we see those who can sustain success continually innovate to find new ways to gain advantages. Don’t take it from me though; take it from a hypothesis with its very own Wikipedia page, the Red Queen hypothesis. The Red Queen hypothesis explains that when entities are in competition (such as predator and prey battling for survival, businesses vying for the same clients, fantasy baseball participants competing for eternal glory, etc.), an improvement in one entity necessitates improvements in its competitors should they desire to survive. Once both entities improve, neither is better or worse off. As the Red Queen says to Alice in Lewis Carroll’s Through the Looking Glass, “Here, you see, it takes all the running you can do, to keep in the same place.”

This is not an unfamiliar feeling in fantasy sports. Every year we find new and improved sources of content, strategies, and information, but the results are often the same because our competition is also finding the said new and improved. The impact of the Red Queen effect on fantasy baseball is thus apparent; in a landscape where the same information is universally available to all, where strategic decisions are completely transparent and replicable, an improvement in analysis, process, or information procurement will only be beneficial for as long as it takes opponents to recognize and copy the improvements. The owners who do not improve fall behind, but it often only takes one or two owners to improve their process in order to nullify a would-be competitive advantage. On top of that, even if our competitive advantage in fantasy baseball is not easily recognizable, the results will be recognizable. Therefore, even misunderstood attempts at replicating our process can spoil the ability of our advantage to bear fruit. The good news is that the Red Queen hypothesis is described as an inability to improve returns iteration over iteration or generation over generation. Why is this good news? Because fantasy baseball success is determined by annual results, not by how well we can sustain a competitive advantage. If we can consistently find new advantages and cash in on them before our competitors adapt to them, then what we have is the very thing we have been discussing, a sustainable competitive advantage.

Those words might make us feel nice, but how exactly are we going to consistently find new advantages? And how are we going to cash in on them before our competitors adapt to these new advantages?

1. Know your competition
The only way to stay ahead of your competition is to be able to have some accuracy in predicting how they will behave in the future. Because an ability to gain an advantage is dependent on the actions or inactions of your competition, strategic decisions should factor this in. I like to ask the following: What changes have owners in your leagues made in the past? Do they tend to follow improvements made by others in your league? If it is possible to know, what are their preferred sources of information? Have any of their recent actions indicated a shift in strategy or process? Thinking about how others think is the first step in continually finding competitive advantages.

2. Fight complacency
This comes directly from my previous success trap article. We like to believe in our own genius; therefore, when we find a competitive advantage, we like to think that our ingenious findings will sustain us forever. The key here is in recognizing how easily your league-mates can replicate your competitive advantage. Were you the first one in on the pitchers are less consistent bandwagon or cheaply drafting soon-to-be closers? That is great, and it might have helped you in winning a league, but depending on how observant your league-mates are, those advantages may disappear by next year.

3. Check assumptions
This is really the bedrock of finding inefficiencies. The problem is that finding inefficiencies is now the cool thing to do. While we may now have better assumptions, even accurate assumptions are only right to an extent. Going against the grain when the grain has gone too far is the way to go here. For a super crude example, behold Adam Jones. Yes the low walk rate was scary, but those that happily scooped him when he fell too far are not losing any sleep about his plate discipline. Ultimately, we have to be able to find the areas where the consensus has gone too far.

4. Do it
We have come to the cashing-in part. The only way you are going to profit from going against the grain or finding an improved method of analysis is to act on it. Many words have been typed on our inherent resistance to change and it is this resistance that can lead us to watch others reap the rewards of new competitive advantages if we are too afraid to change course. To borrow from the great Marshall Goldsmith, “what got you here won’t get you there.”

I am the first to admit that these are not groundbreaking findings or recommendations. My hope is that it gets us to think about the nature of success in fantasy sports and what we can do to not only improve, but improve relative to our competition. My other hope is that my articles on strategy, decision-making, and human behavior help in this regard.

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