NBA Free Agency Game Theory

BY ADAM GROSSMAN

ESPN recently released its survey of 48 players where it asked them to “look into the crystal basketball for their free-agency predictions on LeBron [James], DeMarcus Cousins and more.”

Asking players not named James and Cousins about what players like James and Cousins may do in free agency is a difficult proposition. For example:

Which player do you think LeBron should pair up with?

  • Giannis Antetokounmpo: 12 percent
  • Chris Paul: 12 percent
  • Dwyane Wade: 12 percent
  • Paul George: 9 percent
  • James Harden: 9 percent
  • Kawhi Leonard: 9 percent
  • Other: 37 percent

Which rumored team should LeBron NOT sign with?

  • Sixers: 31 percent
  • Warriors: 28 percent
  • Lakers: 16 percent
  • Rockets: 16 percent
  • Other: 9 percent
  • Others gaining votes: Clippers, Spurs, Wizards

According to the survey respondents, two of the players that James should pair up with are on the Rockets. Yet, also according to the survey, the Rockets are one of the top teams James should not sign with. It has also been reported that James could be joining George (a player LeBron should pair up with) on the Lakers and yet the Lakers are not a team LeBron should sign with according to the players.

It appears that ESPN is taking a The Wisdom of Crowds approach made famous in the James Surowiecki book of the same name to determining the free agent future. However, these questions potentially have the problem of not having independent observers making judgments that are at the heart of success in crowdsourcing survey responses. More specifically, players have a vested interest in where James and Cousins play in that these players will either be their opponents or their teammates. Combining this with a relatively small sample size (there are close to 450 players on active rosters at any given time) can create these types of statistical problems.

 

While determining where individual stars will play next season is certainly interesting, it is the “and more” in the last question of the survey that got our attention. In particular, this question likely has the most predicative validity in the survey.

Which team have you heard makes the best free-agent pitches?

  • Celtics: 27 percent
  • Heat: 15 percent
  • Lakers: 12 percent
  • Warriors: 9 percent
  • Other: 37 percent
  • Others gaining votes: Clippers, Grizzlies, Hornets, Knicks, Mavericks, Pacers, Rockets, Spurs, Wizards

Each player in the survey has likely gone through or will go through the free agent process with each free agent potentially prioritizing different items that would factor into the “best” pitch determination. For example, the best pitch could include the team that could provide the most money, the best coach, the best organization, or “If you bring Tom Brady? That's pretty damn cool.”

That the Celtics received the highest response rate may not be surprising. The team has landed top free agents like Gordon Heyward and Al Horford in the past two years (in addition to trading for Kyrie Irving). What is more surprising are the next three teams on the list. Let’s start with the Heat and the Lakers. Both teams have been famous for not signing marquis free agents in the past few offseasons. Why would players then say that they heard that the Heat and the Lakers have made the best free-agent pitches?

This is a good example of outcome bias when evaluating a situation. More specifically, a decision “is often judged to be lower in quality when it leads to a poor, rather than a good, outcome.” It is easy to blame the Heat and Lakers management for their failure to sign stars but that would mean succumbing to outcome bias. By having some of the best free-agent pitches, the Lakes and Heat are maximizing their probability of success. That is what management should be doing in these situations even if the final outcomes do not end up the way the team or fans want.

The Warriors are another interesting part of the best free-agent pitches list – for almost the opposite reason of the Heat and the Lakers. Yes, the team signed one of the best free agents available over the past few seasons in Kevin Durant. However, why would the team need a good pitch? In the last season without Durant, the team won an NBA record 73 games with perennial All-Stars Stephen Curry, Draymond Green, and Klay Thompson. What other pitch would Durant really need to hear than that?

The Warriors seem to recognize that free agency is a form of a repeated, multiplayer game rather than solely a one-time, zero-sum game. In game theory, repeated games are basically exactly like they sound – a game played multiple times. However, most people think of free agency as a one-time, zero sum game. That is a player (like James or Cousins) makes a decision to join a team in a given year (one-time) and then all other teams cannot have that player (zero-sum).

The Warriors appear to realize that they will likely not have the ability to keep all of their core stars give the nature of the NBA salary cap. The team also realizes that free agency occurs every season making it a repeated game with different players. Therefore, the Warriors will need to recruit other free agent players in the future and that the process should start now. Having the “best” pitch signals to future free agents now that the Warriors are a desirable destination even without their current stars because of how hard management will work to sign players. This strategy enables the Warriors to be in position to be successful in the repeatable, multi-player free agency game rather than focus on any one single, zero-sum transaction.

The ESPN survey does provide an interesting glimpse into how players view free agency. However, it is their responses to free agent pitches from teams that can potentially best predict where players will land. Right now, it appears that the Heat, Lakers, and Warriors are likely to be free agency winners in the short and long-term by playing game theory in ways that maximize their future success.