Pater Familias » Baseball

WHEN ARE SUNK COSTS SUNK?

Philip — Tue, 03 Jan 2012 19:20:12 +0000

WHEN ARE SUNK COSTS SUNK? Although the article by Baliga and Ely presents its arguments as an exception to the long-established rule that it is rational to treat sunk costs as by-gones, I think it is easier to view the argument in the article as focusing on the difficulties in applying the long-established rule. If you can’t figure out what went wrong with the original decision, the previous analysis, even though not completely remembered, should be given some weight. To take the example of the expensive outfielder, perhaps some of the scouts who evaluated him before the decision saw some abilities that should be taken into account….

WHY SUNK COSTS SHOULD BE IGNORED.

Philip — Mon, 02 Jan 2012 18:16:05 +0000

WHY SUNK COSTS SHOULD BE IGNORED. Kids, you have probably encountered the the economic argument that it is a fallacy to take sunk costs into consideration in making a decision (“sunk costs” are defined in this wikipedia article as “retrospective (past) costs that have already been incurred and cannot be recovered.” My post here provides an example of an economist who rigorously refuses to take sunk costs into effect in reading books: “Tyler Cowen in DISCOVER YOUR INNER ECONOMIST says that you should always be willing to treat ‘sunk costs as sunk’, to ‘let bygones be bygones.’ He says he follows this precept by finishing only one out of every ten books he starts.”

The wikipedia article points out that although economic theory says that it is irrational to consider sunk costs in making decisions, evidence from behavioral economics shows that: “Sunk costs greatly affect actors’ decisions, because many humans are loss-averse and thus normally act irrationally when making economic decisions.” An article in the American Economic Journal Microeconomics (November 2011) by Sandeep Baliga and Jeffrey C. Ely—”Mnemonomics: The Sunk Cost Fallacy as a Memory Kludge”—gives the example that: “France and Britain continued to invest in the Concorde supersonic jet after it was known that it was going to be unprofitable.” Nick can sympathize with another example: if a baseball team takes on a very expensive contract with an outfielder who is not good enough to play, it would be rational to release the outfielder and move on.

MY FAVORITE HOAX.

Philip — Wed, 21 Dec 2011 02:11:14 +0000

MY FAVORITE HOAX. This hoax was sent me by a friend who is a very astute authority on baseball. I wish I had been taken in by it.

TYLER DURDEN IS NOT A HOAX (COMMENT).

Philip — Mon, 19 Dec 2011 15:24:38 +0000

TYLER DURDEN IS NOT A HOAX (COMMENT). Dick Weisfelder and Nick picked up on the link in my post on rehypothecation to a post by Tyler Durden, whose picture on the blog looks like Brad Pitt. I completely missed that “Tyler Durden” is the name of the character that Brad Pitt plays in Fight Club, which is understandable because Fight Club is one of many markers that separate me from Nick’s generation. Dick goes farther and suggests that I have fallen for a hoax. It is jolly to think of a hoax about rehypothecation going viral. However, scrolling through the ZeroHedge blog shows that “Tyler Durden” is the nom de blog for one or more financial sophisticates. The nom de blog seems to have been chosen to reflect a certain attitude towards life and markets. Here is “Tyler Durden” on the diplomatic war between France and the UK that I posted on yesterday: “As for the idiotic pissing contest between the two countries with epic chips on their shoulders, the final appropriate outcome would be Moodys and S&P coming out and downgrading them both to junk, and even that would be optimistic.” The quote gives a flavor of the style.

MONEYBALL AND PIG FARMING.

Philip — Mon, 31 Oct 2011 01:46:03 +0000

MONEYBALL AND PIG FARMING. Lindy Hinkleman, a pig farmer in Idaho, has just had his second success in three years in national fantasy baseball contests. He won a grand prize of $100,000 this year and over $240,000 in 2009. This article points out that he is also a champion pig farmer and considers himself fortunate that he has been able to do what he wanted to do after graduating from college. This article quotes Hinkleman on how his love of baseball and of pig farming work together: “Raising pigs and this baseball thing really go together….There are certain things in farming: keeping track of productivity, indexes for your sows, the genetic lines there. To do well, you’ve got to be pretty proficient in numbers. Math has always been my strong suit. I can see things with the numbers.”

ALBERT PUJOLS SHOWS LEADERSHIP.

Philip — Mon, 24 Oct 2011 00:52:08 +0000

ALBERT PUJOLS SHOWS LEADERSHIP. Over the years, some of the most violent criticism I have read in a newspaper results from a failure by an athlete to give an interview. The latest example followed an error in the ninth inning of the second game of the World Series by Albert Pujols, the star of the Saint Louis Cardinals. The error cost the Cardinals the game. Pujols did not appear for questioning by the media after the game. This Yahoo article is typical of the reaction of sports writers to not getting an interview. Not doing so is often described by sports writers in terms more applicable to a serial killer. The article says that “Pujols is not accountable to the media. This is not about that.” The article then goes in for sports writer’s cliches about how errors are a result of moral failings. Pujols “spit the bit in a crucial game.” It was “bush league”. Pujols displayed “zero leadership.”

I have never been interested in postgame questioning of players. The questions are usually of the “How does it feel to lose this game [or win this game]. This yahoo article by a different writer notes the real problem: “leaving reporters to think up their own stuff.”

In the next game of the Series, Pujols hit 3 home runs and led his team to victory while setting a World Series record for most extra bases in a game.

WAS THE RED SOX COLLAPSE A ONE IN 278 MILLION EVENT?

Philip — Mon, 10 Oct 2011 20:51:51 +0000

WAS THE RED SOX COLLAPSE A ONE IN 278 MILLION EVENT? The 278 million figure is fun to think about, and the events were dramatic. One home run by potentially the last batter in one of the games was by a hitter with a .108 batting average for the year. An unlikely event. The Red Sox won only 7 of their last 27 games, and that seems unusual for a team that had won over 60% of its games going into September. But there are arguments that those 27 games were not statistically independent. To begin with, there are the psychological issues. I posted here that I was reconsidering my belief that sportswriters have exaggerated the importance of streaks because people don’t realize that random number sequences will generally include some long streaks. It seems to me that there are teams that “catch fire” after they get a lead in the standings, and win a high percentage of their games the rest of the way—the Detroit Tigers this year or the 1969 Mets. The games during these streaks are not independent events because each success makes these teams more likely to win the next game. If I believe that psychological factors can lead to hot streaks, I have to accept that they can also lead to losing streaks. Another explanation is that the Red Sox pitching staff wore out. It’s a long year, and pitchers wear down. One of the other famous collapses, by the 1964 Phillies, came when their pitching also wore down. If the Red Sox pitching was weakened in September, it’s a mistake to use their high success rate in the early months to estimate their probability of winning a game in September. Further, if their relief pitchers were heavily used in one game, the probability of losing the next couple games would increase with the weakening of the bullpen—another reason why the games in September were not independent events.

APOPHENIA AND SPORTS JOURNALISM.

Philip — Mon, 10 Oct 2011 02:59:20 +0000

APOPHENIA AND SPORTS JOURNALISM. In yesterday’s cartoon, the first character says: “A weighted random number generator just produced a new batch of numbers.” The other character replies: “Let’s use them to build narratives.” The caption at the bottom says: “ALL SPORTS COMMENTARY”. Nate Silver linked to the cartoon in his discussion of the collapse of the Boston Red Sox at the end of the season. They had a large lead for making the playoffs at the beginning of September and then on the final day of the season, they were still in position to make the playoffs until last second heroics in two games made them lose out. There are narratives readily available for sports writers (and overused) which involve some kind of moral failing on the part of the Red Sox. You can also look at the baseball results as a series of random events. You can estimate the probability of the Red Sox winning a game on the basis of their winning percentage for the first five months of the season. There are baseball sites which will tell you what the probability of a team winning a game at any point in the game—given certain assumptions. FanGraphs will do it on a play by play basis. Nate Silver “just for fun” assumes that the events affecting the Red Sox were independent of each other (in a statistical sense) and on that assumption concludes that there was: “one chance in 278 million of all these events coming together in quite this way.”

APOPHENIA—THE CARTOON.

Philip — Sat, 08 Oct 2011 22:47:13 +0000

APOPHENIA—THE CARTOON. I posted here on September 25 about apophenia, and I have since been encountering discussions of the phenomenon although they don’t use the new word. Nate Silver even linked to this cartoon which dramatizes the phenomenon. The site has other insightful cartoons.

THE STORY OF A LONG SEASON.

Philip — Tue, 27 Sep 2011 23:57:49 +0000

THE STORY OF A LONG SEASON. The use of statistics represented by MONEYBALL changed sports journalism as much as it did baseball on the field. There was a flood of baseball writing by newcomers writing from a different point of view. Baseball writers had been beat writers, who turned a baseball game into a story. But there had always been people like me, who would read about a game by checking a box score, and the new writers wrote as if the box score was what was important. The story that the new journalists influenced by sabermetrics tell is not about individual games. The story is about average performances over 162 games. Ron Shelton wrote Bull Durham. In the Slate article, Allen Barra quotes Ron Shelton: “They always end these sports movies with a ‘big game’….. In real life, there is no big game. There’s always a game coming up after.”

WHAT’S YOUR FAVORITE BASEBALL MOVIE?

Philip — Tue, 27 Sep 2011 16:57:03 +0000

WHAT’S YOUR FAVORITE BASEBALL MOVIE? This article in Salon finds a consensus choice—somewhat surprisingly because there are a lot of good ones. The winner is Bull Durham. I was pleased to see a few mentions of Major League and surprised to see no mention of The Bad News Bears, except in this letters section. All three movies, which would be my first three, are comedies based on truthfulness.

MONEYBALL AND STORYTELLING.

Philip — Mon, 26 Sep 2011 23:56:35 +0000

MONEYBALL AND STORYTELLING. I have posted several times on MONEYBALL, the book by Michael Lewis. The movie of MONEYBALL has now opened to generally favorable reviews. The reviewers who seem to be the harshest critics are sportswriters, who point out inaccuracies and argue that the book overly simplifies the impact of sabermetrics (statistics) on baseball in the last few years. I think that the criticisms underrate the achievement of MONEYBALL in successfully dramatizing—by simplifying—an unusual subject. Fiction writers generally avoid dealing with the world of work and business. Lewis not only dramatizes the overall story, but he finds the stories in individual incidents (I posted here about his exaggerating the story of one baseball trade for dramatic effect). The screenwriters of Moneyball have evidently had the same success.