The Tournament Auction
vs. Traditional Office Pools
A couple innovations I outlined earlier, which use historical seed performance and Fibonacci numbers to enhance pool scoring, were intended to make office pools a true reflection of bracket-picking talent. That’s an important but ultimately incomplete insight. It’s incomplete because a) office pools have the dual purpose of identifying good bracket pickers and encouraging participation from a diverse group of people and b) the concept of the office pool itself is fundamentally flawed.
I always bristled at the notion that, in most office pools, picking the national champion correctly is rewarded the same as picking the entire first round correctly. While this may not satisfy March Madness wonks, it actually makes a lot of sense for your average office pool. Office pools are partially designed to reallocate funds in favor of the most clairvoyant basketball fan, but their primary concern is to build community and generate interest in sports from people who would not normally pay attention. So, having a scoring system that keeps everyone close until the end is ideal if you want to get money from the same group of people next year. Everybody knows a team that’s capable of winning the title, but not everybody knows how to pick the 7-10s. So if you want to make an office pool a fun experience for everyone, let the participants place all their eggs in one basket.
But it doesn’t have to be that way. The office pool is flawed because it expects everyone to pony up the same amount irrespective of their level of interest, it’s boring, and it does a remarkably poor job of doling out rewards. The office pool, especially the one that backloads its point values, is frighteningly akin to a lottery. It’s desperately in need of market principles.
Think of the tournament auction as college basketball’s version of a stock market: the most successful participants will own portfolios of blue chips and long shots, participation is proportional to interest and budget, and even the smallest gains are backed up by quality research. To extend the stock market analogy further, part of what makes the Wall Street so accessible is that it allows the hardcore financial analysts to make cold, rational, fundamentals-based decisions while novices can get rich simply by owning their favorite brands. And you won’t find much better brands than in the NCAA Tournament, whose 65 participants have an amazing assortment of mascots, histories, philosophies, geography, and, yes, uniform colors. So without a contrived (not to mention poor) scoring system, it’s possible to get the whole office participating and having fun by doing nothing more than acknowledging market principles.
Throw extreme scarcity (one owner per team) into the mix, and you’ve got a recipe for an event that increases in excitement year after year. With bidding wars and live updating, the tournament auction is both elegant and complex. It is elegant in that it simply and accurately reflects the market value (granted, within a very limited market) of each team. It is complex in that a small bid on one team simultaneously changes the value of every other team, making it difficult to evaluate teams and amass an attractive portfolio.
The idea of a portfolio should be a very attractive one for anyone who has squeaked out a two-point lead through the first two rounds of a traditional pool only to have your champion get upset in the Final Eight, propelling you to a last-place finish. With the tournament auction, you can win money while conceding that you have no idea who will win the national championship. In many cases, buying up all the 10 or 11 seeds is actually a worthwhile strategy. Wherever your interest lies, you can spend money there, rather than contributing a flat fee to take a guess at who will win it all.
The tournament auction should not be seen as competition for a traditional pool, however; they work very well side-by-side and can in fact be complementary. For instance, let’s say you know of 7 seed that has an excellent shot at beating a 2 seed. Picking that team to make the Final Eight or Final Four in a traditional pool would constitute bracket suicide, so you can have that knowledge reflected in the tournament auction. By picking up the 7 seed in the auction, you get the benefit if that team goes on a run without assuming as an enormous risk. Conversely, the gains to be had in the tournament auction are generally smaller than those that come from winning tournament pools, so it’s good to play the pool if you are interested in a big windfall.
For a big-time sports fan, saying that there’s something wrong with the tournament office pool is kind of like complaining about Santa Claus, but the fact is that the office pool can be improved upon immensely. It’s time for a new approach, and that approach is called the tournament auction.
© 2008 Daniel Lauve