Thursday, February 12, 2009

Auction design for football games

One of Tim Harford's excellent recent columns is on market design for professional football games: Why the NFL should replace the overtime coin toss with an auction system. The issue is that, when a game goes to sudden death overtime, the winner of the coin toss more often also wins the game.

"An ... elegant solution to the overtime problem was proposed in 2002 by Chris Quanbeck, an electrical engineer (and Green Bay Packers fan). Quanbeck's idea was to auction off possession of the ball in the natural currency of the game: field position. The team that was willing to begin closest to its own goal line would receive the privilege of possession."
"One person who did notice the Quanbeck proposal was Columbia University economist Yeon-Koo Che, a leading light in the theory and practice of auction design. Che wrote not to the NFL but to the economics journals and proved that "divide and choose" was much fairer to the loser of the toss than the current system. But what interested Che and co-author Terrence Hendershott was whether an auction might be even fairer than "divide and choose." They concluded that it would be, because the auction is completely symmetric—unlike with the "divide and choose" method, neither coach is forced to make the first move, so nobody has a built-in advantage. For Che and Hendershott, then, "divide and choose" partly solves the coin-toss problem; the auction fixes it completely."

Che and Hendershott write elsewhere (in The Economist's Voice)
" As far as we are concerned, this little thought experiment was a pleasant reprieve from the current economic woes, and it is nice that economics can have useful things to say on such an unlikely subject matter (a sport we both love), but as one hate email we received suggests, we should and will now “stick to bean counting.” "

I certainly hope they won't: there are plenty of bean counters, but talented market designers are rare.

HT Parag Pathak

1 comment:

michael webster said...

Here is a whole bunch of other amateur market designers' solutions:

What is interesting is the different ways people conceptualize the problem.

1. Is the no touch, lose the game a problem?

2. Are field goals easier and therefore a problem?

3. Is the problem that advantage play from the 4th quarter doesn't carry through?

4. Is the problem where the kickoff starts from, since before this the coin toss generally performed well?

5. Is the problem with the concept of sudden death?

6. Is the problem with the perception lately that a random event determines an important issue?

7. Why do the football people think that the auction mechanism is plain silly? Is that strategic thinking not allowed?