Information, Uncertainty, Game Theory, and Quality

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.

Cities

Recently, I read Jane Jacobs’ The Death and Life of Great American Cities and Jonathan Mahler’s Ladies and Gentlemen, the Bronx is Burning. Due to her residence in New York City for many years, Jacobs’ theory is illustrated by the real-life examples of politics, economics, and city planning recorded by Mahler in his study of 1977 Gotham.

Both authors display a strong understanding of history and the events that have led to the current state of New York City. Unfortunately, both possess a rambling writing style that creates many excruciating chapters. Editors have jobs because they do good work.

Written in the 1960s, Great American Cities is somewhat dated; a revision would have brought the ideas up to date. There are some prejudiced comments that no longer apply. For example, women don’t stay at home to supervise children and hiring women to work as elevator attendants in dangerous apartment buildings are somewhat dated. I don’t think that race necessarily equates with socio-economic factors but Jacobs’ treats the two as the same.

Many of Jacobs’ premises are illustrated by narrow examples, instead of studies. Jacobs’ talks about understanding a problem before trying to solve it and lists three types of problems: simplicity (two variables, X and Y), disorganized complexity (countless variables, solved with statistics and probabilities), and organized complexity (interconnected variables, such as life sciences and city planning). The third type requires people to think about problem-solving processes and observe how small clues demonstrate how the larger systems are operating.

Yet until the final chapter, Jacobs does not provide any examples of such complicated problems. Mahler does a far better job showing readers how Reggie Jackson and the New York Yankees inspired citizens, how Rupert Murdoch’s New York Post influenced the mayor’s election, and how neglect by police and politicians incited the rage and frustration of the riots in Harlem. Great American Cities often takes five pages to describe how street-lights should favour buses; Bronx is Burning jumps from issue to issue at a sometimes frenetic pace, which is welcome because it seems to symbolize the organized chaos of New York City.

Both show, sometimes comically, sometimes tragically, how too many levels of government botch projects because of comical misunderstandings. Jacobs recounts how several public housing buildings in New York City burned down because of a mix-up between three agencies delayed fire inspections by up to a year. Mahler writes about how incompetent unionized management at Consolidated Edison caused a huge blackout during the hottest time of the summer because they couldn’t make key decisions. Several cumbersome entities are shown as creating the economic justification for their existence, rather than serving the people who need their help.

Jance Jacobs believes that cities are complex functional systems of order, not chaos. Despite this sophistication, basic common sense and understanding can be employed to make things better. Diversity is important, cities are integral in raising children and modeling the way, people must have pride in their communities, roads should give preferences to transit and vehicles such as delivery trucks which stimulate economic growth. Don’t concentrate all the interesting cultural buildings downtown because then there will be no reason for people to stay in their own communities. Little things that would still work today despite the age of the book.

Whether a reader reaches the end of Great American Cities (I did, barely) or not, I think that there are two crucial points that can apply to any field. One, understand the crisis and create solutions that address specific problems. Two, “life attracts life” as Jane Jacobs, and whether using technology or cities or something else, people are still interacting with each other and it’s important to appreciate how this energy makes various places, events, institutions, traditions, buildings, etc. attractive and how it can’t be simply removed and relocated somewhere else.

Finally, I can start reading Hitman: My Real Life in the Cartoon World of Wrestling.

Babar is an Example of Bad Keynesian Economics

Though he remains a hero to children worldwide, Babar the Elephant is a terrible economist. Watching an episode of the Nelvana-animated television show documented his monarchy in the Kingdom of the Elephants, it became clear how his fiscal policy is a disaster waiting to happen. Major capital expenditures are required to bring the jungle up to modern standards of civilization and the ongoing war with King Retaxes and the rhinoceroses must be an enormous money pit.

After fleeing to France after watching poachers kill his mother, Babar meets a kindly old lady, who unbeknownst to him is a fervent colonialist. She takes the young elephant shopping for clothes and convinces him of the merits of Western civilization before he returns home. Meanwhile, the previous elephant ruler eats some bad mushrooms and dies so Babar is crowned king.

Aside from the poaching issue, the elephants seemed to be getting along well enough but Babar convinces them to dress like humans and construct buildings like those he saw in Paris. Elephant-sized edifices and bespoke suits must be tremendously expensive and from what author Jean de Brunhoff reveals about their economy, the elephants must have tremendously leveraged themselves. Should a sub-prime mortgage crisis arise, many pachyderms will be left homeless when the banks foreclose.

Babar is a savvy ruler and engages in a costly war with the nearby Rhinoceros kingdom in order to create a few jobs and pass his homeland security legislation. Massive macro-economic spending is used to control the economy of the Kingdom of the Elephants and daily life. The previous “laissez-faire” policy is replaced with a totalitarian regime backed-up by armed guards. These aren’t white or green collar jobs that will create wealth.

It’s probable that a large percentage of G.D.P. is spent on health care. Sure, less elephants are dying of poisonous plants but at what cost? Where is the balance that could be found a generation ago and beyond? In de Brunhoff’s tales, debate is absent and Babar rules with an iron trunk.

Fortunately for Babar, when the system crashes and creditors come calling, the World Bank and I.M.F. won’t hesitate to prop up his regime. Is the average elephant better off due to all of this intervention? Even Adam Smith would have accepted the risks that come from living in the jungle, such as hunters, in order to propagate simple micro-economics among an educated population. Sadly, the average elephant is ignorant, now concerned more with dressing up more nicely compared to their neighbour than natural law and distributive justice.

Where’s a journalist like Tintin or Anderson Cooper to shed light on these problems and keep Babar honest?

Freakonomics

Freakonomics by Steven D. Levitt interesting book for the guy who likes to generate “controversial” discussions at parties. So sumo wrestlers cheat, drug dealers live with their parents, and real estate agents receive a higher closing price when they sell a house that they own themselves. OK. Steven Levitt delivers his arguments in a light, easy to read, slightly esoteric format.

The economics are sound. Basically the pretence is that every individual is interested in maximising their utility. OK.

The most contentious chapter concerns Levitt’s belief that the decline of the crime rate in the late 1990s was caused by the legalisation of abortion in the 1970s. As a result of Roe v. Wade, indigent women who would have otherwise brought a hardened criminal into the world received abortions. However, I feel that the issue is far more complex and involves multiple factors.

It’s sort of like that TV show where the dude finds a briefcase containing details of his imminent death and attempts to change the future. Is changing his behaviour enough to cheat death or did he die because of the actions he took in light of this new information?

Levitt makes a very solid statement that incentives drive behaviour. I definitely agree; the world is comprised of choices and consequences. Levitt’s point is similar to Choice Theory: individuals choose to behave the way they do because this behaviour fills a need. People are responsible for their actions because they responded to an incentive and chose to maximise their utility.

(On that note, why don’t we teach more decision-making in schools?)

I believe that intrinsic motivation is much more powerful than extrinsic motivation. Coaches steer the ship but if the players believe personally in the ship’s direction, much less short-term coaching is required. According to Levitt and Choice Theory, coaches must create meaningful incentives to engineer the actions they desire. Every student-athlete is an individual and this is easier said than done.