Information, Uncertainty, Game Theory, and Quality

In Economics and Business Studies by Brock Bourgase

Tryouts are a case of adverse selection because coaches rarely have the opportunity to see a player’s complete skill set. It’s certainly a matter of imperfection information and coaches must develop signals that reliably reflect the ability of perspective team members.

Sometimes teams make a draft pick because of “unlimited potential” or a “high ceiling”. This logic becomes absurd if it causes players who have been seen in greater detail (therefore exposing all of their skills and flaws) to be overlooked. In 2005 and 2006, Chris Paul and Brandon Roy were seen as the collegiate players most ready for the Association yet they were picked behind others who have not performed as well since entering the league. Some N.H.L. teams wish to draft the enigmatic Victor Hedman instead of the over-exposed John Tavares. Such instances show that qualities such as athleticism, one-on-one skill, and the success of previous players sharing characteristics are inappropriate signals of success in the Association.

George A. Akerlof wrote “The Market for Lemons” in 1970. The paper predicted that in cases of asymmetrical information (when the seller knows more about the product than the buyer), the threat of buying a lemon will discourage most buyers from paying a high price for a used car. Sellers with good used cars will not enter the market because they will never receive the true value of their car and the market will consequently collapse. Currently, tryouts are a situation where the seller (player) knows more about the product than the buyer but the market (tryouts) has not collapsed. The onus falls on coaches to hold tryouts and select players based on sound principals.

Conducting tryouts based on performances in scrimmages could also lead to biased signals. If games are an extension of self and young players are developing their personality for the first time, an individual game such as basketball could lead to greater selfishness or poor decisions. The coaching staff should understand how and why these young players are making their choices. Constructing the evaluation so that it excludes the temptation to show-off and control the pass will identify the players who are most skilled and best suited to join the team and avoid “basketball lemons”.

Identifying player combinations with good chemistry, observing how prospects interact with each other on and off the court, demonstrating a new skill and watching how it is performed, or organizing tightly controlled part method drills provide better information than an open scrimmage. Coaches must recognize the make-up of their players and use game theory to predict their reactions. Alternatively, they could gage the players’ reactions and spend more time analyzing exactly what it means. Coaching skill lies in creating situation that create quality and force it to rise to the top. Obviously, standards should remain clear, fair, and consistent.