Question:
Dear Economists,I recently had an argument in my fantasy football group that I believe an economist can answer. I need to define some terms and give some background before I get to the question.
I am in a 12 team league and we conduct a snake style draft every year to pick our players. A snake style draft is one in which teams are assigned a draft position and the draft is conducted 1-12 in the odd numbered rounds and 12-1 in even numbered rounds. Our rosters consist of 16 players. Every year your roster completely resets and we redraft in reverse order of standings (meaning that the team that finished last picks first and the team that finishes first picks last) with the following exception. You are allowed to keep up to 2 players, one player that you drafted (class B) and one player that went undrafted the previous year (class C). Provided that they are on your roster on Thanksgiving.
Players can be divided as follows:
Class A1 players cannot be kept by definition, and cannot be dropped from your roster.
Class A2 players cannot be kept, but can be dropped from your roster.
Class B players can be kept by giving up a draft pick that is 3 rounds earlier than where they were selected the year prior. i.e. If they were selected in the 5th round you would have to give up a 2nd round pick.
Class C players can be kept by giving up a draft pick that is three rounds later then where they are projected to be picked that year. i.e. If they are projected to be picked in the 5th round you have to give up an 8th round pick to keep them.
Generally speaking, Class A1 players are more talented than Class A2 players, who are more talented than Class B players, who are more talented than Class C players. Also, it is impossible to know how good a player will perform in future years, or what their projected draft position will be because those projections are not released until July of the following year.
As a result of these rules I adopted the following strategy after I was eliminated from this year's playoffs. I dropped all Class A2 and B players from my roster and picked up 16 Class C players using the following logic. Class A players are worthless for future years because I will lose them for nothing when the rosters reset. Class B players require me to pay a premium to keep them, and because they would need to vastly overperform expectations they are not worth the investment. Class C players are the least talented of the bunch, but I will have 16 chances to pick one that is in a good position to perform well, and I will get that player at a discount because I will be able to draft them later than when the market says they should be drafted. The other teams do not acknowledge this as a legitimate strategy. I believe that this illustrates relative value (valuable players that have no value considering my circumstance), opportunity costs (roster spaces that have worthless players but could have players with some value), and expected value (players who are worth very little now, but may have value later and can be drafted at a discount).
What do the economists think of my strategy?
As a post script, I tried to trade Class A players for Class C players before dropping them, but no team would trade with me because they thought I was giving up too much value for nothing.
Answer:
Thanks for your ‘Ask an Economist’ question. I will provide some thoughts, but may not be able to answer it completely to your satisfaction given I do not fully understand how your fantasy league operates. For example, you do not explain how players get classified as A1, A2, B, and C players. It is also not clear to me what you mean by ‘give up a draft pick’ to keep a player (i.e., do you mean exchange one draft spot for another versus actually lose a draft pick and a player?). Another thing you do not make clear is your league’s rule for starting players by position and how that impacts your strategy of picking up 16 C players.
Some basic economic concepts can be applied to all types of decisions, including managerial decisions involving fantasy football teams. A ‘good’ decision using economic logic is one where 1) a good decision making process taking into account relevant economic factors is employed and 2) those relevant factors are calculated correctly. ‘Marginal analysis’ is the appropriate process to use which looks at the expected incremental benefits vs the expected incremental costs for different choices. One often overlooked marginal cost is ‘opportunity cost’ (i.e. what do you give up) which you make reference to.
I believe the appropriate way to apply marginal analysis to your situation is to NOT look at picking up 16 C players in total. I would recommend thinking of the problem being how many C players do I want to acquire where you take into account position player constraints. You should look at picking up that first C player and calculate the expected marginal benefits and costs. If there is an expected net gain (in fantasy points earned relative to the competition), add that player. Then do the same calculation for the next-best C player and keep repeating the process until there is no net expected gain. As you know, you are dealing with a lot of uncertainty here with regard to the future performances of individual players, especially C players. Depending on one’s assumptions about those future performances, a person could support or oppose your strategy. I believe a strategy of picking up at least some C players would have more merit the greater the probability one assigns to their chances of coming on at the end of the year and then performing more like an A or B players next year. Of course, the more C players one acquires, the greater the likelihood at least one or two of them turn out to be good players, which I think is your main point. The thing you need to consider with that strategy, as I have already noted, is whether or not the expected benefits exceed the expected costs. One can justify the strategy with certain assumptions. Hindsight will reveal whether or not those assumptions were warranted.
Good luck with your fantasy football league next year.
