Monday, March 15, 2010

Filling Out Your Bracket, Econ Style

When it comes to March Madness, an economist should just pick all the favorites, right? After all, the highest-ranked team should theoretically be favored in every game (except for that pesky 8-9 matchup, where the No. 9's have won 54% of the time). So why not "pick chalk," as they say, march all of the No. 1 seeds to the Final Four, and call it a bracket?

While such a bracket is the optimal strategy in a vacuum, it's almost certainly not going to win you the office pool. There will be upsets galore throughout the tournament, but there's no way of telling where they'll occur (and just because teams with, say, animal mascots or those who wear red jerseys have fared better in the past doesn't mean they'll come through again this time).

To win, a lot of your random picks will have to come through, and a lot of your friends' will have to falter. You want to make your bracket as different as possible from the rest of the pool, while still picking favorites for most of the matchups. If you're wrong, you would have lost anyway, but if you're right, you're going to pick up points where others won't. So if you are filling out a bracket among a group of coworkers in Washington, DC, you probably shouldn't pick Maryland or Georgetown to go deep into the tournament, because it's likely that many other people have picked them as well.

It also helps to know a little something about college basketball, but who has time for that?