By all accounts we just wrapped up a thrilling trade deadline. The volume, the drama, the last minute-ness, the quality of players—both major and minor leaguers—was more than those looking to be entertained could have hoped for. Those (if such a population exists) looking for variety in trades, though, were likely disappointed. Sure, we got a good, redundant major leaguer for another, somewhat redundant, major leaguer trade in the Matt (Duffy and Moore) swap, and a salary dump (Liriano to the Blue Jays), but every other trade was minor leaguers for major leaguers (usually on contracts expiring at this or next season’s end). There are tons of variations within this type of trade, but it is all the same kind of trade. This type of trade, of course, makes sense—teams that have a chance to win this year value certain players more than teams that do not have such a chance; and when two teams value a player a differently, there is always an opportunity for a trade.

But, why then, do certain players that should be valued differently (such as Jeremy Hellickson) not get traded? Also, how is it possible that over the past 10 years, no two teams have said, “I like your third baseman more than my third baseman and you like my third baseman more than your third baseman” and just swapped them? Or how has this not happened for any other position? We see this once in a while with sixth starters and inconsequential relievers, but we never see this with any primetime players. Why don’t we see this? I believe there are several contributing factors that I will discuss below. I also believe there are several (or more) contributing factors I have not thought of and, thus, will not discuss below.

1. The Endowment Effect
The endowment effect is a hypothesis that the value we place on a given thing increases upon owning a given thing. This goes beyond our tendency to own what we like, as demonstrated in a famous study conducted by Daniel Kahneman and Richard Thaler in which one group of university students was given coffee mugs decorated with the university’s insignia and the other group was not given anything. The first group, when asked how much they would be willing to sell their mug for, responded, on average, with $7.12. The second group, when asked how much they would be willing to buy the mug for, responded, on average, with $2.87. In other words, possession matters to how we value things. We are, if fortunate enough, happy to provide our own children with three meals a day, but we usually are not willing to do so for kids that are not ours (another case to be made for taxes). Moreover, it seems preposterous that one parent or set of parents would say, “I like my kid just fine, but he is very rambunctious and I always valued calmer kids more, maybe I can trade with another parent who prefers rambunctious kids, but has a more laid-back child.”

This is all to say that if two major-league players (or two minor-league players) are close enough in value to actually be reasonable swaps for each other, the endowment effect will work to eliminate any chance of a trade because each team will overvalue its own player. Teams, however, are not ignorant to the endowment effect, but knowing of its impact actually works to further reduce the possibility of such trades. How so? Possibly, this happens because of information asymmetry.

2. Information Asymmetry
Knowing what there is to know about the endowment effect, we can thus imagine what any general manager is thinking when another general manager calls them up and asks, “Hey, any interest in Player X?” To put those imagined thoughts into words, they are probably thinking, “Why are they trying to trade Player X? What’s wrong with Player X that they are trying to trade him? What do they know about Player X that I do not know about him?” Particularly in the case of trades, where all teams attempt to give up as little as possible for the highest possible return, teams are not going to trust each other. And when parties in negotiation with each other do not trust each other, deals tend not to happen.

But trades do happen, they are just almost all the win-now for win-later trades that we described previously. So how do these trades overcome information asymmetry and the endowment effect? Possibly, this happens because such trades are defensible.

3. Defensive Decision Making
In Risk Savvy: How to Make Good Decisions, psychologist Gerd Gigerenzer explains that when faced with uncertainty, we (people) make decisions that we feel will be defensible in the future should something go wrong, rather than choosing the option that gives us the best odds of accomplishing whatever it is that we are trying to accomplish. What does this have to do with Major League Baseball trades, specifically ones in which prospects and players on expiring contracts are swapped? Well, those trades, the now-for-later or later-for-now trades are almost always defensible so long as one’s team is actually in (regarding the former) contention or (regarding the latter) out of contention. If the prospects miss, well, prospects come with a failure rate. If the rentals are not enough to produce a championship or make the playoffs, well, only one team wins each year and winning a championship is hard.

Conversely, this is why we never see a Carlos Correa for Francisco Lindor type trade, because if you miss, there’s no defense of the miss. On the Fringe Average podcast, Jason Parks explained that while an Oscar Taveras-Jurickson Profar swap might make sense on paper, it did not make sense in practicality because it did not make sense from a job security perspective, because if you are the general manager that misses on that trade, you will be out of a job.

It is thus easy to say that if teams made their front offices more secure in their jobs that front offices would be able to make better decisions unencumbered by fear of losing one’s job. But that’s how Josh Donaldson gets traded away and then it doesn’t seem so great. That’s the downside and it is horrifying. Even though such a management policy might be best over time (even if it’s also the way in which one can acquire Josh Donaldson), it thus has to be awfully difficult for a front office to act on such a policy or for an owner to greenlight any of these types of trades.

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The endowment effect really can harm possible trades with vetoes on all sides. When I was a kid, I offered to trade my sister to a friend who was an only-child in exchange for a dachshund and his entire toy car collection. Right during the tough part of the negotiations parents found out and scotched the deal. My parents were completely immune to my objective arguments that the toy cars might increase in value and the dachshund had much lower annual maintenance costs.
Troy Glaus for Scott Rolen, Jan. 2008
It seems worth pointing out that, objectively, what you call the "endowment effect" is built on a base of economic value, regardless of whether the value shows up on the field. That is, teams market their players and their players develop fan bases, which sells tickets and jerseys with names on them and creates buzz on the internet . . . and that value is lost and has to be rebuilt the day you trade the player.

Please note that the absence of an analysis of what marketing and fanship means to an entertainment organization is one of the central things that prevents sabremetric understanding: there is economic value outside what happens on the field. This, for example, explains how the Billy Beane era has trashed the A's fanbase even while generating extra wins per dollar spent and finding unexpected sources of talent. The Donaldson trade cited here was bad on field value for on field value, but that's not the issue with Beane, many of whose trades have been good for on field value. The Cespedes trade was fine value for value and had a certain amount of surplus baseball strategy value that is easy to understand for folks who read Baseball Prospectus, but it was hideous for fans. It is simply not true that the Giants have, in every generation, trashed the A's in attendance or that Oakland is a "small market" while San Francisco is a "large market". It is that Billy Beane has begged the fanbase to go elsewhere, and it has.
Excellent point! Beane operates in a bubble that almost no other team exists in except maybe the Marlins (who at least pretend to want to keep their stars and don't pretend to not make money). The 'always striving' sell that the A's offer is seemingly tired and I find it hard to believe that they honestly can't just build a team at least in a somewhat more transparent fashion. Yet typing that, I realize that roster turnover is pretty great for almost every team and maybe we see a bit of our(readership) bias in it.

The devaluation of marquee is an interesting path of inquiry. On the opposite side and in a different sport, the NBA offers multiple stooges who trade to put fans in the seats while losing the value/salary end of the deal.
I agree with much of your post, but I think there's more nuance to the "Beane has turned off the fanbase" argument. The late '90s were a pretty rough period for the A's franchise, and it was Beane and company who brought about the wining (and quite popular) early '00s A's teams. I don't think that the A's front office doesn't care at all about the fan base, and their feelings about individual players, but I think they believe that winning will have a stronger effect on attendance than having a marquee player and a terrible team (like the current Angels, or the A-Rod era Rangers). Don't get me wrong, the Céspedes trade hurt many fans (including me) quite a lot, regardless of on-field value received in return, and the Donaldson trade didn't make much sense from day 1, but I also disliked the Jeremy Giambi trade, and was stoked that the A's signed Eric Chavez long-term, so clearly making me happy isn't a great way to run the franchise either.
1981--Ozzie Smith for Garry Templeton. That is long enough ago it may not be relevant anymore, though. But it was a trade of established shortstops. This sort of thing is remarkably rare.
I think it's somewhat hard to find players of similar value in terms of production and contract status to make those kinds of trades happen. Also, if the difference in value is just perceived value, it may not be worth the risk (I.e. changing clubhouse chemistry) or hassle for a busy GM to spend time on trying to do the swap.
1988: Randy Myers for John Franco.

Ranging back a bit further, Bobby Murcer for Bobby Bonds. Both were around 29 at the time. The more interesting part is that sly, old Gabe Paul flipped Bonds to Angels a year later, for Mickey Rivers and Ed Figueroa, key pieces of the late 70s championship teams.

In the 90s, I recall Rhoden for Drabek. Weren't they the same person all along?
Rick wise for steve carlton.
Ask the students how much they would pay to have the other guy's free mug kept full of coffee on a regular basis. Most students would probably say zero.

THAT is the correct taxes analogy. Not this silly remark. Your columns are supposed to be about how people think, Jeff. You should try it with your own work.