Getting Inside the Way Sports Teams Should Make Decisions -- And the Biases That Lead Them Astray

(Inside Science) -- The decisions made by baseball teams are prone to many biases. For example, teams may be too optimistic about how well a player will perform after signing a huge contract, or they may put too much emphasis on the most recent data about a player’s performance. There are many ways that cognitive biases influence how decisions are made, in sports and our everyday lives. Senior baseball writer Keith Law of The Athletic discusses these topics in his new book “The Inside Game .”

Law began immersing himself in the topic after reading “Thinking Fast and Slow,” a book written by psychologist and economist Daniel Kahneman in 2011. Law then dove into the academic literature on decision-making and reasoning. He realized he had an opportunity to translate this discipline for baseball fans and perhaps help them make better decisions in their lives, although he admitted that’s not always easy.

“I don’t always make better decisions, but I try,” he said. In an interview with Inside Science, he discussed how these biases might affect sports in any year, but also in 2020 as the COVID-19 pandemic continues and leagues and teams make decisions about how and when to resume their seasons.

The conversation below, which has been edited for clarity and brevity, took place April 22.

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Keith Law, the author of The Inside Game.

Chris Gorski, Inside Science: Why did you write a book about how bias is involved in baseball and how people can recognize their own biases?

Keith Law: One of the great things about baseball is that we have so many discrete decisions happening within games, before and after games, even before and after seasons, and copious data available to us. That just makes it perfect fodder for many types of analysis that would be harder to do on sports like basketball or hockey that are more continuous flows.

Is being aware of biases the best method of overcoming them? What else do you have in your pocket?

Awareness is the most important thing. Most people don’t know that these things exist. It’s not like we were taught them in school -- other than moral hazard and sunk costs, those came up in my economics classes.

And then the second step that I think is the hardest part of all is changing your decision-making process, whether you’re talking about personal finance at home, or what you’re doing at work, or in my case, writing about the decisions that other people make. I know recency bias exists. I know outcome bias exists. What do I need to do in my process so that my decision is not skewed or just fundamentally altered by these biases? And that takes time. It takes a different type of thinking.

Towards the end of the chapter where I talk about good decisions, I talk about the Toronto Blue Jays giving Jose Bautista a five-year contract extension basically off of one good season [for $64 million, after the 2010 season]. That seems to be an extreme case of recency bias -- except they were right.

It was really instructive for the book to get inside the head of the Blue Jays general manager at that time, Alex Anthopoulos, because, as you noted, the gut reactions from everyone else were “this is nuts, you shouldn’t give this guy this contract.”

He said other agents were calling and saying, “What the heck are you doing? Have you lost your mind?” I was one of the people who criticized the deal, too. I thought this was recency bias at work and they were falling for the small sample.

And I talked to Anthopoulos, who’s now in Atlanta. “How did you know?” He was great. First of all, he said, “We didn’t know. But we had a process. And that gave us confidence that the new data we were seeing was real and sustainable and had predictive value.” He did exactly what you would want a manager or a leader to do in that situation. He knew the bias existed, gathered all the data he could to work around it and made a decision.

What biases can sneak in when teams are considering trading, say, two or three pretty good pitching prospects, who will be under team control for several years, for a highly paid star, who may be under a much more expensive contract for fewer years? How does the calculus change when a team thinks it could contend for the playoffs if it added one more top performer?

It depends a lot on your time horizons as an executive, such as: Are you trying to win right now, this season? Is that one acquisition you’re potentially making, is he maybe the difference between that playoff spot and not having a playoff spot? The financial impact in the short term of something like that is really, really significant and might justify giving up what appears to be a lot more in future value than what you are getting in short-term value.

The flip side is a lot of times when teams make deals like that, their mistake is not evaluating the players involved. But the mistake is in evaluating their own talent. [Editor’s note: This includes the players on the team who are not involved in the potential trade].

If you don’t evaluate your own team correctly, your own level of talent correctly, you’re just not going to make good decisions.

The Major League Baseball draft usually happens every June, after the high school and college seasons, and there’s lots of scouting at those games. What’s the best way to approach this year’s draft, when so little amateur baseball has been played?

What we know is Major League Baseball has the right to move the date of the draft and to shorten the draft to as little as five rounds . It would normally be 40 rounds.

And we know, with a pretty high degree of certainty, there will just not be any more amateur baseball this spring. We are in very uncharted waters here in terms of the draft, where teams are going to be asked to select players often that they’ve not seen. There’s also a lot less data. We’ve lost a whole spring of college data that would have been otherwise available.

I believe teams will flee to the safety of college picks, who are generally more predictable than high school players [because] we have more actual data from previous seasons.

If teams do select more college players, is there a chance that they will overcorrect and introduce new biases?

Oh, absolutely, there is certainly a chance of overcorrecting. I would say this is an understandable overcorrection. I might do the same thing. I might go in knowing I’m overcorrecting and still be OK doing it. I know that probably sounds not great -- I just wrote a book about avoiding your biases, and I’m saying, “Nope, steer into the bias, we’re good with this one.” But these are such significant decisions with such high opportunity costs.

How should baseball approach the decisions about when to come back after delaying the season due to the pandemic? What biases are important to think about?

[Editor’s note: Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told the New York Times on April 28 that some sports may need to skip this year.]

Yeah, that’s a fear, right? A bias I don’t really discuss in the book that I think is definitely going to come into play is just flat-out wishful thinking. We just we want baseball back. Heck, I want baseball back. It’s my job, right? I don’t really have a lot to write about if there’s no season this year.

The thing that scares me the most is that people are going to see bits of good news in different places and rush to reopen. And if I were advising the Major League Baseball Players Association, I would say you need every public health expert you can get on your side to make sure that whatever structure you set up absolutely first and foremost considers the health of the players, and all the people who are going to be around the players -- the coaches, training and medical staff.

Think of the stadium operations workers. People don’t talk about them. They’re very much invisible to us. They make the least money, they’re likely to live in more densely populated areas. Social distancing is probably more difficult for them. I’ve seen many people saying social distancing is essentially privilege. Not everybody has that privilege.

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