The real baseball trade deadline approaches. The trade deadline in many fantasy baseball leagues also approaches. It is a wonderful time of the year. To celebrate, we will take a look at some of the strategic and behavioral decision-making factors that we should be considering this time of year. Some of these factors will be old friends, while others will be new acquaintances. We will be going more for breadth than depth here.
League Norms and the Default Effect
We are looking at the intersection of two behaviors here, so buckle up. A norm in many a league is for teams to wait to trade until the trade deadline. A less extreme norm is for teams in the middle of the pack to wait until the traded deadline to decide whether to be buyers or sellers. This is often a powerful norm because it provides owners with (i) an easy route for risk aversion and (ii) a nice default option. These decisions are hard, and the default effect tells us that when we are faced with complex or weighty decisions, we rely more on defaults. In this case, many teams will avoid making moves until the trade deadline.
That is a bunch of words to explain something we already knew, but they are typed because it is important in how we prepare for the trade deadline. Mainly, it is important not to get discouraged with owners that we have gotten nowhere with in trade talks and incorrectly write them off as possible trade partners at the deadline. Even if we do not write off such owners, we are less likely to prepare for trades with their teams or spend time reviewing their rosters for trade opportunities. The issue is that some of these owners were only inactive because of the discussed league norms and default effect. If we are new to a league, we should prepare as if each owner will become active around the trade deadline. If we are familiar with the league, we should take note of which inactive owners tend to become active.
Uncertainty, Game Theory, Sunk Costs, and Strategic Agility
The fantasy trade deadline (assuming it is held after the MLB trade deadline) involves two kinds of uncertainty: the first being the uncertainty in future production of players and other traded assets, and the second being the uncertainty in the future actions of our competition. The strategic decisions of our competitors are what we will review here.
The first point here is that we should not expect all of our competition to act optimally, or in a way we would act, or even in a way we would expect them to act. Given the nature of fantasy baseball, where one team’s optimal strategy is dependent on the decisions made by all other teams, we need to be able to take the actual actions of our opponents into account in order to make the best decisions. Of course, if we are preempting the market, we should be using our best assumptions about how the rest of the league will react. However, if we are acting after the actions of our leaguemates, we need to be able adjust our strategy (strategic agility), otherwise we run the risk of leaving value on the table.
Sunk cost becomes an issue here because we have likely spent a lot of time by this point in the season following a single strategy (going for it or rebuilding or something in between) and we have often spent a good deal of our pre-deadline efforts trying to predict the actions of our competitors. All of this is good process, but it becomes an obstacle when the landscape changes (a buyer becomes a seller, a player that we did not think would be available becomes available) because we are less likely to act on these changes if they are not part of our anticipated script. Again, like so many of these articles, the takeaway is to do our research and be prepared, but to also be prepared to be opportunistic and strategically agile. In other words, do not dismiss opportunities just because they were not the opportunities we expected.
Moving Parts and Attentional Bias
The MLB trade deadline causes some players to be in the news, on our twitter feeds, and, thusly, on our minds more than other players. The attentional bias, in which our perceptions and valuations are affected by recurring thoughts, can potentially make this an issue for us. Players that are constantly being discussed in the media are going to be top of mind for us when we sit down to do some fantasy baseball research and analysis. The issue is that this can cause us to devote too much time to certain players for, what generally is for fantasy baseball purposes, an arbitrary reason. Of course we want to weigh the factors of changes in ballparks, playing time, and roles for these players, but we also need to make sure that this is not taking away from devoting the needed attention to the players that have not been discussed, for which nothing has changed.
Eagerness, Recent Play, and the Clustering Illusion
The trade deadline is an exciting time and many owners are eager to trade at this time. Eagerness can be a good because it can lead to us capitalizing on more opportunities. Eagerness can be bad because it can lead us to convincing ourselves to agree to sub-optimal trades just to enjoy the fun of making a trade (this was a huge weakness of mine when I first started and something I still work at improving on). The issue I see most frequently when two sides are close but still apart on a trade is for us to look for reasons to make a trade.
This is where recent play and the clustering illusion come into play. Wikipedia defines the clustering illusion as “the tendency to overestimate the importance of small runs, streaks, or clusters in large samples of random data (that is, seeing phantom patterns)”. This becomes especially dangerous when we want to see something, when we want to see that a player is better or worse than we thought in order to make a trade. This is where having a consistent valuation process helps. By sticking with a consistent process it is easier to tell when we are letting our biases get involved because we will be able to see when we are allowing ourselves to stray from the process.
Systems of Thought
Lastly, the trade deadline is one of the few times that we do not always have substantial time to do full analysis on a trade before making a decision. In Thinking, Fast and Slow, Daniel Kahneman calls System 1, “the brain’s fast, automatic, intuitive approach” and System 2 “the mind’s slower, analytical mode, where reason dominates.” While System 1 is great for making the millions of small, inconsequential, nearly subconscious decisions we make every day, System 2 is optimal for making complex decisions, such as the trades we face at the deadline in fantasy baseball. I wrote about this before last year’s deadline and you can read the entire article here, but the main takeaway is that we should try to be as prepared for the many possible outcomes that could occur at the deadline so that we can make our Type 1 thinking as Type 2-like as possible. It is certainly not a perfect solution, in fact a perfect solution probably does not exist, but it helps.
Also, have fun and good luck.