Loss Aversion in Fantasy Baseball (continued)

8 04 2010

I was already planning to follow up yesterday’s post with some reasons why loss aversion might exist in fantasy sports, when reader Joe makes the following comment:

The goals of fantasy sports isn’t just winning; there are two: winning and maximizing bragging rights.

Picking up some new dudes and saying, “I KNEW that Whosthat McRandom was going to be awesome” is much more awesome than bragging, “I KNEW that Oldnewsy von Fartington still had another year in him.”

This is a decent summary of a casual attitude towards fantasy sports. “I probably won’t win anyway, so I might as well have some fun along the way.” It’s not my attitude, but I’m not a casual player–I’m an extremely competitive one. In my view, there’s no point in bragging if you’re losing. If you want to brag, play a strategy most likely to win, then brag when you win. Find creative ways to brag if need be. Back in 2003-2004, I KNEW that Kerry Kittles still had another year in him when he helped me win a 20 team fantasy basketball league.*

*I didn’t actually know this, so much as strongly suspect. The following season, Kittles played 11 games off the bench, then retired.

However, there actually is a case to made for picking cagey veterans over hotshot sleepers, from a bragging perspective, which is that no one else is doing it. Over at Baseball Analysts, Sky Andrecheck argues that experts should make recommendations based on how their opinions set them apart from other experts. It’s not hard to find an expert who’s big on Jason Heyward or Gordon Beckham; it is hard to find an expert who likes Johnny Damon and Chipper Jones over those two.

Throughout the season, I’ll check in on the veterans I praised and prospects I questioned in yesterday’s post and compare their stats. If my picks pan out, no doubt I’ll brag relentlessly.

Finally, I’d like to generalize the point I’m trying to make about young and old, and, just for fun, I’ll do it in the form of a delta-epsilon definition:

In fantasy baseball or basketball, for every set of players without proven track records ε, there exists a set of players δ who play the same positions, are older, and are deemed worse by fantasy experts, such that the expected value of δ exceeds the expected value of ε.

Loss Aversion in Fantasy Baseball

7 04 2010

In behavioral economics, loss aversion refers to a bias where people prefer a chance of gain over the combination of locked-in gain and chance of loss, even though they have the exact same results. For example, consider the following cases:

Case 1: Choose between receiving $100, or having a 50% chance of receiving $200 dollars.
Case 2: You receive $200. Then, you choose between losing $100, or having a 50% chance of losing $200 dollars.

Mathematically, the two cases are identical. Yet experimentally, when presented with offers as written, people tend to prefer the second option in case 1, and the first option in case two. Basically, people like the feeling of upside risk, knowing they stand to gain extra, but don’t like the feeling of downside risk, or knowing they might lose extra.

In fantasy sports, this bias pops up in the strong preference for younger players over older players. For instance, consider these two options:

Option 1: A young outfielder, with little major league experience, has a 50% chance of becoming a very good player this year, but otherwise will have little or no value.
Option 2: An old outfielder, who has been very good for many years, has a 50% chance of providing little or no value this year, but otherwise will remain a very good player.

Again, these two options are mathematically identical, but there’s a significant preference for Option 1 among fantasy players. Spotting these opportunities is a key way to gain edge in fantasy sports, and a key reason why my teams tend to include players at the tail-end of their career.

For instance, this year I have one team with an outfield of Bobby Abreu (36 years young), Raul Ibanez (38) and Johnny Damon (37), with Chipper Jones (38) and a banged-up Lance Berkman (34) slated to share my utility spot. Some of those guys won’t pan out. But I’m just as confident in this group as I would be in an outfield of Jason Heyward (20), Hunter Pence (27), and Chris Coghlan (25), with Gordan Beckham and Billy Butler (both 24) at utility. And my team came much more cheaply, allowing me to slot more reliable players elsewhere.

I’ll check back on this question throughout the season, but right now I feel pretty good.