Keeping Separate Decisions Separate
Wed, Jul 5, 2006
by Geoff Young
One point Sandy Alderson made at last Friday’s Pizza Feed dealt with the importance of not grouping together decisions that should be made independently of one another. His specific example involved trading for a player who became a free agent shortly after being acquired and then signing that player to a long-term deal at least in part due to having traded for him. The names aren’t important, but the concept is — this sort of thing happens all the time, in all walks of life.
Massimo Piattelli-Palmarini, in his Inevitable Illusions (affiliate link), discusses this very phenomenon. He notes (p. 25) that people exhibit:
…a propensity to invest ever more, to bring to fruit a certain investment, once we have irreversibly made that investment.
An example that Piattelli-Palmarini provides relates the story of a Mr. Baker, who has paid $200 for tickets to a show. In this scenario, the theater is far away and there is a “terrible snowstorm” that makes driving an undesirable option. As Piattelli-Palmarini observes (p. 25),
…had they bought no ticket at all, they would gladly turn down an offer of $200 conditional on their acceptance to drive the same distance through the storm.
The surprising part is that research indicates “the likelihood is still high that they will go to the theater simply because they have spent $200 on the tickets.” The reason for this is a phenomenon called “minimization of regret.” In Mr. Baker’s case, there is the sense that he wants to get something for what he paid for despite the additional cost — in time and risk — of actually getting it.
In the scenario Alderson presented, a player was acquired at a cost (other players) during the season. Following the season, the decision was made to retain the services of the acquired player. Regardless of whether this was the correct move, the fact that the player had been acquired at a cost during the season should not have been a factor in making the decision.
In other words, the regret a GM might experience at losing an acquired player to free agency should be independent of any regret he or she might feel over having acquired the player in the first place. These are two separate and distinct events, with independent decision processes and outcomes.
From a purely theoretical — almost clinical — standpoint this makes perfect sense. But it also takes awareness to recognize when this situation arises in the real world, as well as training to be able to act and respond in a rational manner despite any natural instincts to do otherwise.
To summarize, there are two decisions that are made in our baseball scenario:
- the decision to trade for a particular player
- the decision to re-sign said player
Neither has (or should have) an impact on the other. Yet, we see this error made all the time. Minimizing one’s susceptibility to it through awareness and training provides a GM (and a team) with a competitive advantage over others who lack such knowledge and tools. And in baseball, as we all know, a competitive advantage is a good thing.
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July 5, 2006 at 10:00 am
Excellent analysis Geoff, as usual.
I came away extremely impressed with Alderson, he seems very willing to explore new ideas and genuinely committed to making the Padres into the best organization in baseball.
July 5, 2006 at 10:15 am
did anyone else see this?
http://sports.espn.go.com/mlb/.....id=2509719
I hope he is still there on friday
July 5, 2006 at 11:01 am
Thanks, Anthony; agreed about Alderson.
Steve: I hope Canseco is there as well; either way, the meetup is on.
In other news, BA has a profile of Chase Headley up today:
http://www.baseballamerica.com.....61872.html
July 5, 2006 at 11:15 am
GY are you buying tix at the gate on fri or online before hand?
July 5, 2006 at 12:39 pm
GY, are you and the other attendees at the Pizza Feed planning on a summary of what transpired? I, for one, would be interested.
July 5, 2006 at 1:09 pm
Here’s a look at the Padres’ OF situation … http://www.signonsandiego.com/.....notes.html … DR should be back tonight … this tells me that the Padres’ don’t really like McAnulty, Sledge, Knott, Cust … Johnson’s clearly got more upside than either of them, but each of them, in that order, imo, seem like better options for a roster spot than EY …
July 5, 2006 at 1:30 pm
Here’s my thought on Chris Young and the All-Star team … I think the All-Star team is for All-Stars, not for guys with a “good first half”. So, while I’d be OK with CY making the All-Star team, I don’t think he’s the best choice. If he’s an All-Star, then he’ll prove it over the 2nd half of this season and again the 1st half of next season and make the team next year (and several more years after that, I’d hope). If he doesn’t prove he’s an All-Star over the next baseball-year, then that means he wasn’t deserving of the spot this season.
Nomar’s an All-Star … Wagner’s an All-Star … Peavy’s an All-Star … heck, even Piazza’s an All-Star (but I understand the concept of him being *way* past his prime) … CY may be an All-Star in the future … I hope so … no need to jump the gun, however, we’ve got plenty of time to watch him develop into it.
July 5, 2006 at 1:54 pm
GY
Great post today. Excellent, well-thought out stuff, as always. I’d love to hear more about the Pizza feed at some point.
That’s a nice little story from BA. I did not know that Headley was an Academic all-america at Tennessee. His quotes are pretty insightful — it would be great to see the kid in a Pads’ uniform sometime soon.
July 5, 2006 at 2:28 pm
re: Mr. Baker’s dilemma … I don’t think Mr. Baker’s situation is framed well … sure he’d turn down an offer to buy tix @ $200 with additional info on the cost to go (time & risk, given the snowstorm), but the situation is this: given an offer to go for free (ie. being given $200 tickets), would he go or not? That’s his decision …
Either way, the point is this … will Mr Baker make the go/no-go decision independant of the sunk $200 cost? I’m pretty sure I agree that Mr Baker should do so … I think I understand the competing (and erroneous) concept of “minimization of regret” … perhaps I’m struggling at the leap from Mr. Baker to Mr. Alderson … it seems easier to see that Mr. Alderson’s decision could/should have boiled down to “given that I have $X million to spend over the next Y years, is Player A or Player B a better investment” and that he needed to ignore the fact that he’d traded for Player A. The better parallel would be if somehow Player A had a buyout option which would represent a real discount if he were signed relative to Player B.
July 5, 2006 at 3:44 pm
LM, you know that you and I disagree on the subject of who deserves to be an All-Star. If the All-Star game was held at the end of the year, after the World Series, then I would agree that any player could be selected. Fans would pick who they wanted (as most do now), but they would pick those who have had great years in the past (Explain why Piazza came in second, its for his past performances, not his present). Since the All-Star game is held midway through the year, why not have those who have excelled so far be selected. IF the name All-Star is throwing you off, then change the name of the game.
July 5, 2006 at 4:08 pm
The All-Hot Game?
The 2-3-Months-Star Game?
The 2-3-Months-Hot Game?
I’d rather watch an All-Star Game … with Nomar and/or Wagner …
Somebody (like CY) who’s “hot” now can turn cold in an instant (and give up, say 4 ERs in 6+ IP (raising his ERA from a hot-looking 2.97 to a not-so-hot-looking 3.13), hey, I was *at* that game … http://sports.yahoo.com/mlb/boxscore?gid=260702125
) and all-of-a-sudden not be “hot” anymore!