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It’s... time for... some... Game Theory?

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The trade deadline just might be too old fashioned for the smartest people in the history of the world who also happen to be running baseball teams in 2019.

Sherlock Holmes, fictional detective. Photo by Ann Ronan Pictures/Print Collector/Getty Images

Yesterday, I had just enough time to write one article, so I had to make a choice: write about the Giants possibly not trading Madison Bumgarner because they couldn’t find requisite value or write about this random thought I had about how we might not actually see big July trades happen anymore. I chose the former, but decided that I’d hold the latter until today or later in the week. But then Bob Nightengale went and tweeted this out —

— and so now it just looks like I’m drafting off this idea. Well, I’m not, but I can’t ignore that the idea is already out there, either. Anyway, let’s consider that after killing free agency the front offices have set their sights on destroying the trade market. Why would they do this?

Simple. It’s cheaper.

Trading prospects who could help future teams potentially creates a situation where future teams become more expensive in order to make up for those missed players. What about the current team? What about the fact that prospecting is an inherently volatile business? These don’t seem to be overriding questions for teams. They all seem to be quite content with their mode of operation and belief that they’re smart enough to figure out a future problem... just as long as the solution doesn’t requiring giving up cheap prospects for more expensive talent.

But would baseball front offices dare be so... I don’t know... short-sighted? Realistically, if you always have an eye towards the future and only have an eye towards the future, doesn’t that make you more likely to crash in the present or just miss something so obviously in front of you?

Bill Plunkett of the OC Register wrote yesterday:

Indeed, going into Monday’s games, 20 teams were within 5 12 games of a playoff spot. That group includes teams that didn’t expect to be there [...] and others that have to question whether the numbers reflect actual contention, momentary helium in the standings thanks to a hot streak or favorable scheduling or just inclusion in mediocrity.

Many in that group have to decide how much they are willing to expend in pursuit of a one-game reward — the wild-card, play-in game.

The article’s angle was from the Dodgers’ perspective, mentioning how tricky it was for Andrew Friedman to work out a deal at this point precisely because of all the teams in varying states of contention and uncertainty in terms of who’s a buyer and who’s a seller. Friedman notes in the piece that the Dodgers have traded away a lot of prospects at the deadline to upgrade areas of the team, adding

“And while we’d love to have a completely flawless team where we didn’t feel like we needed to engage with the other teams, that’s not the case — and I guess it probably never will be where you just don’t feel you couldn’t do something to make yourself better in July.”

So, yeah, right there, a President of Baseball Operations has inadvertently poo-pooed the premise of this post. At the same time, all of the mensas running baseball teams are, essentially, stock brokers, meaning that, in theory, their actions are guided more by economic theory than winning baseball games.

Which brings us to game theory. Not going to go on a drug-fueled Twitter rant here to lay out an incoherent case, but instead the real thing:

the branch of mathematics concerned with the analysis of strategies for dealing with competitive situations where the outcome of a participant’s choice of action depends critically on the actions of other participants. Game theory has been applied to contexts in war, business, and biology.

Specifically, something called the Nash equilibrium, as devised by mathematician John Nash, the subject of the Academy Award-winning film A BEAUTIFUL MIND. That movie features an epiphany scene where Nash comes up with his subtheory within game theory, but subsequent articles have demonstrated how the movie gets it wrong. This explanation of the Nash equilibrium within game theory is much easier to understand than how the movie explained it:

In terms of game theory, if each player has chosen a strategy, and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and their corresponding payoffs constitutes a Nash equilibrium.

Stated simply, Alice and Bob are in Nash equilibrium if Alice is making the best decision she can, taking into account Bob’s decision while his decision remains unchanged, and Bob is making the best decision he can, taking into account Alice’s decision while her decision remains unchanged. Likewise, a group of players are in Nash equilibrium if each one is making the best decision possible, taking into account the decisions of the others in the game as long as the other parties’ decisions remain unchanged.

Applied to baseball:

The Giants are making the best decision they can — wanting to trade Bumgarner, Smith, etc. for what they’ve determined to be the best possible returns based on historical trade patterns of similar players — taking into account every other team’s decision — they don’t want to sell the farm for either a rental player or a player whose production can be nearly duplicated by a player who might cost less and could have more team control — while his decision remains unchanged.

There’s nothing unreasonable about the Giants wanting a top 10 prospect in exchange for Will Smith. If that’s just not what teams are willing to pay, then why should the Giants lower their asking price? Just to get something in return? Why do they have to settle for something they don’t want in exchange for a player they’d be better off keeping? The Dodgers need Will Smith more than the Giants do — why do they get to set the price?

Teams have been stubborn about giving away money, years, and prospects — either through draft pick compensation or outright draftees already in their system — to the point that there have been charges of collusion, a Cy Young winner and Hall of Fame closer sitting out the first half of a season, and the start of new collective bargaining just halfway through the current agreement. But these practices are now conventional wisdom. These actions are rewarded every year.

Owners have successfully limited cost in the domestic draft, free agency, and possibly soon internationally, and now it’s quite possible that the elimination of the waiver trade deadline is another sneaky move to further control player costs. For one thing, it builds in more cost certainty for ownership — they get one more month in a calendar year when they know they’re not going to have a sudden increase in payroll.

For another, it stops teams from getting stuck with a player who gets claimed as a “block” to stop another team from getting him. The NBA has all sorts of salary cap rules designed to prevent the comically stupid GMs who’ve historically populated the league’s front offices from making too many disastrous payroll decisions and while MLB doesn’t quite have the same issue, it’s not hard to imagine a cynical bunch of team owners putting in road blocks to prevent their young front office dudes from crashing the Bugatti.

This post will probably look stupid next week, but for now it’s enough to say that there’s a nonzero chance that absolutely nothing of significance happens before the trade deadline and teams just dig in and refuse to feel “outsmarted” by another GM or be put in a situation where they feel like they’re hurting a theoretical future or later contention window to help the team’s chances this year.

A lot of teams might even be looking at the Giants right now and thinking, “Say, why don’t we just grab every DFA and run him through our system real quick to see if he sticks and hold onto the good players we already have, then draft and develop wisely?” On the one hand, there’s nothing inherently wrong with that idea, but very quickly I get to a point where I feel it’s just a parody of geeks to have someone act as though they’re smarter than the ecosystem.

So, on the other hand, Nightengale’s quote that the market is “eerily quiet” feels more like it’s coming from the same principles and practices that destroyed free agency. If teams are too smart to “overpay” for declining performance, then they’re probably too smart to “overpay” for just two months’ worth of performance or midseason when the in-season price will likely be higher than in the offseason, like how the price of necessities go up when there’s a storm on the horizon.

Protecting a future that’s not guaranteed is not smarter than making moves to improve a team in the here and now. It’s just cheaper. And it’s not ridiculous to fear that’s what this deadline that’s been quiet so far is really all about.