Bet to win

I’ve been on a little bit of a baseball kick for the last few days and I came across this very interesting article from The Hardball Times.

Some money quotes (some of which are quotes themselves, within the article):

“Information that is available only after a decision is made is irrelevant to the quality of the decision.”

“A good decision cannot guarantee a good outcome. All real decisions are made under uncertainty. A decision is therefore a bet, and evaluating it as good or not must depend on the stakes and the odds, not on the outcome.”

So a decision to buy, say, Chris Baird, can’t really be judged on whether or not he performed for Fulham. It can, theoretically, be judged only on whether the odds of him performing were good enough to justify the cost of buying him.

Attention decrement and the law of small numbers suggest that when attempting to evaluate decision-making expertise, if the first few decisions associated with the decision-maker turn out right, we apply the label “expert.” But if they turn out badly, the decider might well be called “inept.” And our opinion gets cast in stone simply because we are too busy or too lazy to examine the entire width and breadth of decision-making. Often times it is the exception that proves the rule, which is to say it is unreasonable to say that we should ignore the results of a single decision when trying to infer a decider’s expertise.

This is especially the case for the football supporter, since we are judging the decision makers based on limited information. Staying with Chris Baird, we don’t know the process that went in to buying him (although we have guessed, perhaps correctly, that it had a lot to do with Northern Ireland). But more than that, we don’t know the ins and outs of the negotiations, or what other options Lawrie Sanchez had, etc. etc. etc. Not to say that Chris Baird was a good buy, just that perhaps it’s more difficult to write the book on Lawrie Sanchez as a decision maker than previously thought.

This hiring and firing practice also has the potential to enslave all major-league organizations to the principle embodied in the Kelly criterion, that in the end it is the teams with the largest bankrolls that will have the greatest success. Simply because over time and repeated hiring and firing of the same bodies, the continual exchange of bodies by organizations within the MLB domain creates a commonality of personnel expertise. And in so doing, organizational cultures and practices will blend together within the entire MLB domain to produce a homogeneous distribution of expertise such that all organizations within the MLB domain will have essentially the same probability of winning “p” and probability of losing “q.” [emphasis his]

My cursory interpretation of this is that Roy Hodgson is made particularly valuable because he had spent so long away from English football. On the other hand, there’s a logical limit: I don’t think Fulham would be better served hiring say, Terry Francona, rather than Paul Ince.

Lot’s of other good stuff here. Obviously, the baseball marketplace is a bit different than the football marketplace, due to the socialistic aspects of the organization. On the other hand, the transfer system values players much more efficiently I suspect. Either way, some interesting stuff.

P.S. If any of my readers like a bet, I’d suggest betting on the A’s to win the AL West. The Angels would appear to have been extremely lucky so far.

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2 Responses to “Bet to win”

  1. weltmeisterclaude Says:

    I had the A’s at 10-1 at the start of the season at Betfair. Just to win the AL West!

  2. Something to dance to… « With A Plum Says:

    […] to dance to… By withaplum Last summer I wrote a post about decision making. At the end of the post, I included this postscript. P.S. If any of my readers […]

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