Moneyball, a book by Michael Lewis (2003), highlights how creativity, framing, and robust technical analysis all played a part in the development of a new approach to talent management in baseball. It also exhibited great examples of the biases and psychological pitfalls that plague decision makers.
Review the article “Who’s on First?” by Thaler & Sunstein (2003) from this module’s assigned readings. This article reviews the book Moneyball by Michael Lewis.
Summary of book/article
The statistical method was the only way for Beane to solve a serious problem: obtaining first-rate talent without a lot of money. After all, the New York Yankees had three times the budget of the Oakland Athletics. And if Beane did find good players, and they performed well, they would be bid away by richer teams. Owing to his low payroll, he would be forced to replace his own greatest successes. In 2001, Oaklandwon 102 games in the regular season, the second-highest total in baseball. They lost three players widely regarded as their best, and they were expected by many to have a catastrophic fall. Instead they used statistical methods to try to replace the lost players with new ones who would provide statistical equivalents—and they ended up winning 103 games, the most in baseball. Their payroll for that year was $34 million, less than half that of their division rivals the Seattle Mariners. In Lewis’s account, Beane was able to succeed because “the market for baseball players was so inefficient, and the general grasp of sound baseball strategy so weak, that superior management could still run circles around taller piles of cash.”
Question:
Explain how you would apply Moneyball’s management lessons in your own endeavors.