April 23, 2014
The Benefits of Early-Season Trade Talk
What follows below is the first of a three part series about negotiation. Like my previous strategy and decision making pieces, this series will not provide a panacea and it will not have broad, sweeping answers. The purpose of these articles is to get us to understand how we (humans) negotiate and, thus, allow us to improve our ability to negotiate.
Why am I qualified to give advice on the topic of negotiation? I am not quite sure. After being on the wrong end of several trades in a league consisting of lawyers and owners experienced at negotiating with those lawyers, I realized that I could know everything there is to know about baseball and still be unable to optimally improve my team through trade if I did not get better at negotiation. After learning the hard way and taking a couple negotiation classes, I have gotten a little bit better and have learned a lot. The hope is that these lessons can help you in your future negotiations.
Lastly, I reserve the right to make this more than a three-part series if I can think of more meaningful topics to discuss.
Why write an article that covers trade talk and negotiation when we are four to eight weeks away (depending on the league) from the beginning of peak trade season? Because if you do it right, the trade talks you have throughout the season can help you make better trades once the time to actually make a trade comes around. How so? Effective early season trade talks allows us to (1) inconspicuously anchor, (2) take advantage of the recency effect, and (3) reduce our transaction costs come trade time. By early-season trade talk I do not necessarily mean trying to make trades happen; rather, I mean talking shop with your leaguemates, asking them what they are looking for, asking if they are in the market for a specific type of asset, or even just talking to them about players outside of trade talks. I had always thought of such conversation as trivial and even disingenuous, but I learned the hard way that such conversation was necessary to improve my trade options. Moreover, I learned that this was just how humans operate. I realized that I was not making trades with virtual general managers on video games anymore and that the teams I wanted to be trading with were making trades with the teams that they had had open trade conversations with throughout the season. That said, let us take a look at the specific benefits of early season trade dialogue and how we can make sure to recognize and capitalize on them.
1. Inconspicuous Anchoring: By having ongoing trade discussions with your leaguemates, you can opportunistically anchor them to their own words when it comes time to make a trade.
Many of you already know what anchoring is and what its benefits are, but for those who do not, I will explain briefly. Anchoring is our tendency to make decisions around certain, often arbitrary, pieces of information. As a negotiation tactic, anchoring is attempting to start the negotiation at the highest possible value if you are selling or the lowest possible value if you are buying. For example, let us say you are not in contention and want to sell an expiring contract that will be of no use to you next season. You would take the smallest of future values back for this piece (let us say a 19th-round pick for a 20th round in next year’s draft), but if you can start the trade talks off by discussing a fifth-rounder for a sixth rounder, then you will have a better chance of landing a 14th-rounder for a 15th-rounder than if you started out asking for a 14th rounder.
When the attempt to anchor is too obvious (like the one above might be) and the trade partner recognizes the offer as an attempt at anchoring, the positive effects of anchoring are negated. In other words, if you are obvious in your anchoring attempt, your trade partner will not let you anchor. Thus, we see the need for inconspicuous anchoring. In order to make the best trades possible, we need to anchor without the other party knowing we are doing so. Please welcome ongoing trade discussion to the table.
Whether it is innate or sociological or something else, humans possess a deep desire to appear to be logically consistent. In the past, those that were caught being logically inconsistent have been excommunicated and, more recently, labeled as flip-floppers (we have come a long way as a society). So when we tell a leaguemate, “I might be looking to upgrade at shortstop if so-and-so keeps this up” in April, we are going to be tempted to listen to offers for upgrades if our previous declaration becomes true, even if we have greater needs elsewhere. We might even give up a 14th for a 15th when our trade partner would have accepted a 19th for a 20th. The two takeaways then become pretty obvious:
2. Take advantage of the recency effect: By keeping tabs on our league-mates, we can be the first team they think of when it comes time to make a trade.
Budweiser and other brands, specifically those that do not differentiate on quality, pay a lot of money for what the marketing folks call “top-of-mind awareness.” Most fantasy teams have negligible marketing budgets, but that does not mean that our teams cannot be top-of-mind for our leaguemates. When given 15 restaurants to choose from, traditional economics tells us that we will choose the best restaurant (whatever best means in this instance). Behavioral economics explains that this is not true, that we are more likely to select an option that we have been thinking about lately. Like it or not, you want your team to be the Budweiser or TGI Fridays of your fantasy baseball league; when another team needs a player you want them to think of the players on your team first, the players that you have been talking to them about all season. Maybe there is not a match, but you do not want to be the owner saying, “I would have given you more for player X” when player X gets moved to another team and you have coveted him all season.
3. Reduce transaction costs: Casual trade talk allows us to have productive trade negotiations without both parties being on super high alert.
Given the nature of a game that declares winners and losers, owners are suspect of making trades with the very owners with whom they are competing against. That makes sense, but trades often make sense too. In negotiation, when we think the other side is trying to take advantage of us, we generally will only accept some sort of premium offer or a clear win in order to balance out the other side’s disinterest in our wellbeing. Because of this, a lot of trades that should happen do not happen. Early season trade talk can help build a negotiation relationship, which can then help both parties to check their defense mechanisms at the door to allow for more constructive negotiation. This is not negotiation text book speak either, we see this happen all the time or at least I see it in every league I play in. The better a relationship two parties have, the more likely they are to make a trade because they can both get past the initial “this owner is trying to ransack me” stage. In other words, these owners have lower transaction costs (trade premiums) than do two owners who are complete strangers. The two owners that are in the same fantasy football league or work together or grew up together, these are the owners that are familiar with each other and these are the owners who we are more likely to see make trades with one another. Ongoing dialogue is not as good as coming from the same nuclear family or playing on the company softball team together, but it can build a better negotiation relationship and thus lower transact costs.
The ultimate takeaway here is that trade talk should a part of your fantasy baseball strategy and process. Just as you take the time to follow the performances of your players and read your favorite fantasy baseball experts, make sure you take time to build those negotiation relationships.