Arbitrage or “Pass to the Open Guy?”

June 14th, 2013 at 9:27 am

I’ve been enjoying the Heat/Spurs NBA finals, tied at 2-2, after lopsided victories have gone both ways.  So I was interested in Neil Irwin’s economic analysis of the journeymen (at least relative to the star-studded Heat) and globally-sourced Spurs.

Neil explains a complicated analysis wherein teams maximize the probability that a shoot is good by trying to find underpriced players (expected value of their contribution > their cost) and getting them the ball when your stars are being double- and triple-teamed (the Heat’s defense seems to alter between smothering, as in last night’s game, and lazy, as on Tuesday night).

This is a neat example of price arbitrage—exploiting a price advantage that the market hasn’t yet discovered—the sort of thing you read about in “Moneyball.”

On the other hand, it also sounds a lot like what we’ve done since we were kids choosing up sides: pick the best players and when they’re open, get them the ball.  So, the Spurs are employing either brilliant arbitrage technique or playground smarts.  You decide.

[Who’s gonna win the series?  Probably the Heat, as when they’re in their zone (you know what I mean–not the 2-1-2 thing), they’re unbeatable.  But the Spurs have shown that they can get the Heat out of their zone, so it ain’t over by a long shot.  Especially not with Tony Parker sacrificing himself like that on every crazy drive!]

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