Advanced supply and demand

Anyone who’s had some basic economics, or even just basic cultural exposure to the ideas therein, knows about supply and demand. The gains from bringing it to your fantasy baseball strategy are apparent. The supply of pitchers goes up relative to the demand—well, that means that pitchers’ prices (aka their values) go down. Well, perhaps. You must be careful with what it is that is actually being demanded and supplied. As always, if you’re not fastidious, economics can take with one hand what it can give with the other.

Take the following example that came up as I wrote about my home league: In my league, we have holds as a scoring stat. So middle relievers are valuable and there are fewer starting pitchers that end up on starting rosters. What should holds do to the value of starting pitchers?

At first blush the answer is: Holds reduce the demand for starting pitching but don’t change the supply, so the price (value) of starters should go down. So, the value of Tim Lincecum in my league, according to this theory, would be lower than his value in standard leagues. This approach is almost certainly wrong. Why?

First of all, as noted in the comments to last week’s article, it is correct to say that the stats of a replacement starting pitcher go up. With holds, the last undrafted started may be Derek Lowe, rather than Ryan Rowland-Smith.

But in the land of the one-eyed, the two-eyed man is king. What you buy in rotisserie leagues (as opposed to, maybe, points leagues) are better stats, not absolute stats. You don’t care if you win by one home run or 20. In the same respect, if everyone has better starters, then the only way to get value out of your starting pitching is to have the best. The price for Lincecum should probably stay about the same or perhaps even go up. What the addition of holds does is skew the value distribution: Guys like Rowland-Smith give negative value now, and Lowe gives zero (since he’s replacement level), but Lincecum is worth around the same. You can blow your entire starting pitcher budget on fewer pitchers now—so even if the budget is lower (since you have to spend some on setup men), you have fewer pitchers that you need to spend it on.

Now there is a slight caveat here: To the extent that you can get stats from different positions, there will be a decrease in the high-end starters’ price. If those holds guys really could help you in WHIP or strikeouts, then the value of a high-strikeout starter would be a bit lower. But this is second-order compared to the two-eyed-man effect.

However, when it comes to batters, the preeminence of the two-eyed-man effect is not necessarily true. Different positions can heavily cross-contribute—mostly you expect contributions (or hope for them) in most batting stats from most positions. Maybe you hope for a bit more power from your first baseman and more speed from your shortstop. But in general, an increase in demand at one position will affect the price of another position.

Again, though, one must be careful. Certain fantasy analysts at behemoth Sports Network have claimed that speed shouldn’t be valued this season because you can basically throw a dart and hit a speed demon in the outfield. Let’s just assume that there is actually a higher supply of stolen-base threats this year versus past years. Does this mean that you shouldn’t try any more for Michael Bourn because there are many marginal speed guys this year? Well, if everyone is getting 20 stolen bases from the center field spot, everything else equal, I want 40 from mine. Sure, 19 is useless to me—that’s the skew working—but I still think 40 is pretty valuable; wasting two starting roster spots on two 20-steal guys is not the way I want to go, if possible.


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Werthless
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Werthless
There are two main aspects of the price one is willing to pay in a draft or auction, and you addressed one of them here. 1) The expected value that player X will achieve over a comparable waiver wire addition. 2) The range of outcomes that a player may achieve around that mean. For brevity’s sake, this article (perhaps inspired by the discussion about the value of SPs in a holds league) focuses on the first aspect, but I feel that the unstated range of outcomes is an important factor backing up our intuitions. Lincecum retains his value in a… Read more »
Chris
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Chris

But wait…however..although…yet again…trick ending coming…

Chris
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Chris

Sorry that was not a constructive comment. The article was just a lil hard to follow because it seemed like you’d say one thing with two caveats attached that possibly negated what was just said.

Derek Ambrosino
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Derek Ambrosino
Jonathan, I think that both you and Werthless make good points. Perhaps you didn’t give enough info about the context of your home league in your original article, which led people to react reflexively to your argument. The argument is sound, and I agree with it in theory. But, Werthless does point out two important caveats. The first is reliability. Pitchers like Hamels only really have that value if they perform on the high side of their reasonable projections. If Hamels has a season in which he performs in the 50th percentile of a reasonable range of outcomes is for… Read more »
Derek Ambrosino
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Derek Ambrosino
BTW, in terms of economics this is a much more complicated question to answer, but just rhetorically – if you have Lincecum, for example, what is the the added value of nobody else being able to have him? I always thought about this with the Bulls and Michael Jordan. In 96-97, the Bulls paid him 30M, and in 97-98, they paid him 33M. That’s effing insane. But, you know what, but if the Knicks, Jazz, Pacers, Sonic, Blazers, Rockets, Lakers (or probably the Hawks, Hornets, or Pistons) would have been able to land MJ – they’d immediately have become the… Read more »
rwperu34
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rwperu34
Derek, A point is a point, regardless of where it comes from…if you have set the correct baseline. Most valuation systems set the baseline at worst starter. In any league that would consider itself standard, the waiver wire is going to produce players better than the worst starter, especially on the pitching side and even more so in a holds league. By setting the baseline too low, you need to have an MORP type of valuation (ie big superstar premium) as opposed to a WAR type valuation system. If the baseline is correct, keeping Lincecum’s points off of another team… Read more »
Derek Ambrosino
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Derek Ambrosino
But that’s because there’s no Michael Jordan among fantasy baseball’s starting pitchers. And, that’s why my question is largely rhetorical. If you play fantasy basketball, for example, you have a different story. Lebron James is the number 1 ranked player, followed by Kevin Durant (Chris Paul has been injured). Hold that for a second, while I jump back to baseball Now, I would be willing to bet that if you were to look at all the 12 team leagues in fantasy baseball and see where the winning team picked in the first round, you’d find that having the first pick… Read more »
rwperu34
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rwperu34
So how much of a $200 budget would you pay for LeBron? How much should you pay? $100? $120? $150? There is tipping point where spending $x on Lebron gives you less of a chance of winning than spreading that money around over several players. It’s going to come down to (pts)*($/pt).  Snake drafts are a whole different ball of wax. You take the best available player that fills a need for your team. That’s the same for the first pick of the first round and the last pick of the last round. In that case, it doesn’t matter where… Read more »
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