How do we arrive at an estimation of what a ballplayer is worth? It’s easy to say that we gather all the historical evidence, project our best estimate of what’s to come, and then sort. But obviously, it’s more complicated than that.

Time for a blind taste test. Here are two pitchers and PECOTA’s 2012 projection for each:

Pitcher A: 13 wins, 161 strikeouts, 3.69 ERA, 1.25 WHIP

Pitcher B: 10 wins, 168 strikeouts, 3.45 ERA, 1.25 WHIP

These two are pretty close in projections, and yet, they could hardly be further apart in perceived worth. In fantasy leagues, Pitcher A is a top 20 pitcher heading into this season with an average draft position in the early seventh round. In “real life,” he’d easily command at least $10-15 million per year on the open market and, as a trade commodity, would return a bevy of young prospects. Meanwhile, Pitcher B is barely perceived as a top 75 pitcher in fantasy leagues, goes undrafted in many of them, and in real life, can’t get anything more than a one-year, $4.5 million contract in a pitcher-starved market.

In case you haven’t guessed yet, Pitcher A is Mat Latos; Pitcher B is Erik Bedard.

Does the valuation make more sense now that you know the identities? Latos is 24 years old and seemingly has a bright future ahead of him. Bedard will be 33 years old next month and, as everyone knows, is as big an injury risk as they come.

Ah, there’s the word: “risk.” As much as projections play a part in the determination of a player’s value, there are qualitative aspects that help us determine what a player is worth. And high up there in the evaluation process are our fairly abstract notions of risk.

Then again, not all risks are alike. There’s the risk that comes from injuries, yes. There’s also the risk of managerial decisions, influencing playing time opportunities and lineup potential. There’s the risk of slumps and mental weakness. There’s also the risk of things like alcoholism relapses and steroids suspensions.

Are we good at properly evaluating which risks pose greater dangers than other risks?

Perhaps not. Surveys have long shown that humans are often a poor judge of this sort of thing, thinking, for example, that tornadoes are a more likely way to die than asthma, even though the latter causes 20 times as many deaths. Look at our public policy priorities: we spend billions of dollars to guard against aviation terrorism even though it’s more probable that an individual will die in a car crash on the way to the airport and that we might be able to save more lives by investing in safer highways.

Our emotions often interfere with our judgment, and what influences that? Many psychologists point to recent memories as a leading reason for letting emotions interfere with our assessment of risk. If you think about it, this may well make us prone to overestimate the risks of a perpetually-injured player like Erik Bedard given the amount of frustration that often goes hand-in-hand with that owning such a player.

What else can we say on the topic of risk?

For starters, although we tend to think of risk in binary terms—either a player is risky or he is not—risk can come in varying degrees. Even a single player can present different forms of risk to different teams in different leagues.

Take Nelson Cruz. He’s a player who has a long track record of getting nicked up and missing games here and there, and we should expect nothing different in 2012. And yet, in those leagues where teams are allowed to adjust their lineups daily and even pick up free agents at will, Cruz probably presents less risk than in leagues where teams are allowed to make roster moves only once per week.

Indeed, when examining risk, there are many external factors that will sharply impact a player’s risk quotient. Among them: roster flexibility, the number of roster spots per team, the quality and quantity of free agent replacement options, the allowance of DL spots, and various other rules and league structures.

We might say that it was foolish and too risky for the Philadelphia Phillies to give Ryan Howard a $125 million, five-year extension that takes him up to his age-37 season, but it would not be nearly as risky for a fantasy team to make a short-term investment in Howard’s immediate upside given the deep talent at first base. At what he’ll cost, if something goes wrong with Howard, fantasy owners can cut bait and pick up a decent first base replacement. The Phillies wouldn’t have that luxury and will be paying a huge contract no matter what. In other words, risk is all relative.

Further, we should not forget about the various risk management options we have at our disposal. In real life, we drive cars even though we know the risks of a car accident. That’s why we wear seat belts and purchase auto insurance. Likewise, it’s indeed possible to adjust one’s self to the risky players out there. Planning to make future use of the waiver wire, should something go wrong, is one obvious route that needs to be considered when drafting. There are other possible techniques too, such as investing in players who can play multiple positions and fill in for a gimpy star on occasion. Yes, even fantasy baseball has insurance plans.

Lastly, risk goes hand-in-hand with price. The bigger the investment, the more production you’re going to expect because of the other, high-value options you’ll be turning down. Ideally, this means that when we’re drafting, we’re looking for high-upside/low-risk players first and foremost. In reality, though, there will always be some risk involved when making a big investment. The question might be how we both judge those risks and compensate for the things that will inevitably go wrong.

Let’s turn our attention back to Mat Latos and Erik Bedard.

To this point, the fantasy community has collectively judged Latos to be the less risky proposition… but is that really true?

Consider an alternative framing of the issue: Latos is a player with just two good years under his belt. Bedard has had five quality years. Latos has experienced success with just one ballclub in his life. Bedard has pitched well for three different ballclubs already. Latos is moving from perhaps the best pitchers’ park in the majors to one that is friendly for hitters. Bedard is moving from a league that favors hitters to a league, division, and home ballpark that’s receptive to pitchers.

Lastly, as far as injuries goes, there’s no question that Bedard has annoyed his owners in recent years with an inability to pitch a full season. On the other hand, Latos is no stranger to injuries these past couple of seasons, and the workload for this young arm has increased over the past two seasons. He’ll now be pitching for Dusty Baker, a manager who is notorious for overworking young pitchers.

The point is not to make the case that Bedard is primed for a better season than Latos, merely that our construction of the risk issue is often funny and fickle. Both players have similar projections. One is going in the seventh round, the other near the end of a draft. I’ll leave it to you to decide who really represents a greater risk right now.