The Wheel and the Collective Action Problem

It's in the Sixers' interest to lose for these guys' sake. How can the NBA convince them otherwise? - Jonathan Daniel

How the NBA's latest solution for tanking runs up against the principles that govern human behavior.

The NBA perceives that it has a behavior problem, in the form of a teambuilding strategy that has been well-discussed on this site: tanking. The NBA allocates amateur players to teams through a draft, and the order in which teams are allowed to select those players is determined through a weighted lottery. Among teams who miss the playoffs, those with worse records have a greater chance of getting the No. 1 overall pick.

The NBA is a league with very small rosters and inclusive, but predictable playoffs. Unlike the other three major North American leagues, it's not the case in the NBA that any playoff team has a legitimate shot at winning the title. Because of this, the importance of having one or more star players can't be overstated, and with salary controls and geographic considerations limiting the movement of such players in free agency, the only chance many teams have at getting a franchise player is through the draft.

In the interest of getting a player like Tim Duncan or LeBron James or Andrew Wiggins, many teams have sold off their veterans and given up all pretense of competing. This leads to messy blowout losses and teams going 16-66 and empty stadia, which looks bad for the NBA even as it benefits the team by increasing their chances at getting a better player, for several years, for cheap.

So let's take it as accepted (which I don't, but David Stern and Adam Silver are making the rules here, not me) that tanking is bad. How do you fix it? How do you keep teams from being apathetic about winning when that apathy is in their long-term best interests?

Human beings operate under what social scientists call bounded rationality--you do what you think is best for yourself based on what you know at the time you make the decision. NBA general managers and owners are no different. They might make bad decisions from time to time, maybe because they had bad information, or because they evaluate the potential consequences of their actions differently. The confluence of conflicting information and conflicting interests is the place where trades happen: the Sixers trade Jrue Holiday for two draft picks because the Pelicans want to win now and the Sixers want to win later. Or alternatively, the Sixers trade Andre Iguodala for Andrew Bynum because they don't know how bad Bynum's knees are. Either way, Sam Hinkie and Tony DiLeo did what they thought was best for the team, given the information and interests they had at the time.

It's unquestionably better for the Sixers to try to position themselves to get one of Julius Randle, Andrew Wiggins or Jabari Parker in the draft. One of those players could be the cornerstone of a title contender, which the Sixers couldn't be without such a player. And making incremental gains--winning 25 games instead of 20, for instance--doesn't do a lot to please ownership or the fans, while winning 20 games instead of 25 or 30 might be the difference between Wiggins and Doug McDermott in the draft.

What the NBA wants is competitive balance--every team having a chance of beating any other team on any given night, and at least give the impression that they're trying to win. This generates interest in the NBA, which means more tickets sold, better TV ratings and more money for the league and the owners, all of which are good things for every team. Inasmuch as basketball is zero-sum and teams want to beat each other, everyone benefits monetarily from robust competition. In that scenario, giving the best amateur players to the worst team is a way of solving inequality, or at least alleviating it somewhat, by helping out the disadvantaged in service of a more robust product overall.

What the Sixers, and many other teams in many other sports before them, are doing is exploiting the fact that the NBA's going to make bucketloads of money whether all 30 teams are going all-out or not. Giving the best draft pick to the worst team creates what the political scientist Mancur Olson called a collective action problem, where in a cooperative setting, a few stronger or more proactive actors will bear the cost themselves of an action that benefits the entire group. This is why almost all military interventions involve mostly American troops--it's not just that Europe is full of cowards and communists, it's that France knows that America's going to kill the terrorists whether they spend lives and money or not, so better to not spend lives and money and enjoy the benefits without putting in any of the cost.

If the NBA finds tanking objectionable, there are two ways they (or any authority, for that matter) can try to prevent it: through changing norms and changing incentives.

Changing norms involves finger-wagging and leaning on teams (or generally, any actor) to act against their own interests because it's the Right Thing to Do. The commissioner has made it abundantly clear that tanking is frowned upon, and the Sixers, to their credit, are telling him to go shove it. And good for them, because norms are fucking stupid, and fuck people who tell you to do something that's bad for you because it's inconvenient for people in power.

That leaves changing incentives--how do you make it so it's not in teams' interest to tank? Well, since 1966, they've introduced an element of randomness, first with a coin flip, then, since 1985, with a full-blown weighted lottery. Now, the worst team isn't guaranteed the first pick, or even a 50 percent chance at the first pick, but only a 25 percent chance at the first pick, with that probability descending in order among the 14 teams that miss the playoffs.

You might be curious as to why this tanking countermeasure has done precisely nothing to curb tanking. And the reason for that is very simple. Here goes:

The NBA Draft Lottery is the Stupidest Fucking Idea Ever Conceived of By Mankind

It's true, and I have no idea how we've been doing this for almost 30 years and people still think it's going to do anything to prevent teams from trying to lose on purpose. The NBA has the draft for two reasons: Primarily, as a means of keeping player salaries down by eliminating the negotiating power of players entering the league. Management loves this because they pay players less, and the union loves this because established union members keep a bigger share of the pie compared to incoming workers who weren't around to negotiate for their own rights. It's exploitative and morally abhorrent, billionaires nickel-and-diming the powerless kids who generate all the value in their product, but such exploitation is what American society was built on, so complaining about it now isn't going to do us much good.

The second reason the NBA has the draft is to foster competitive balance. It's possible that the lottery enhances competitive balance, but....nope, it actually decreases the chance that worse teams will get better players. So it's got to be a deterrent to tanking.

So let's examine how the lottery accomplishes that goal. You see, before the team with the worst record had the best chance at the best pick, and now the team with the worst record has the best chance at the best pick. Seriously--did these people even think, for a moment, about how the draft lottery might deter tanking? Because it does precisely nothing to change the incentives of teams with no shot at a title.

Which is why the NBA is apparently kicking around the idea Zach Lowe wrote about yesterday at Grantland--a rotation of draft position, giving each team total certainty over its draft position in the first round up to 30 years in the future. I've got my own problems with the wheel, namely that it doesn't really foster competitive balance because better teams could end up with better picks, and knowing the draft order 30 years in the future provides a little too much certainty, both for GMs who can plan ahead and fans who'd know years in advance that they'd have no chance at the next would-be No. 1 overall pick.

But here's what it does: it eliminates, entirely, the incentive to be worse to improve draft position. While a team might purposely rebuild to try to clear up cap space, for instance, what the Sixers are doing now would be unthinkable in the future. In short, it does what the lottery does not--it changes behavior by changing the incentives of actors.

Regardless of the ickiness of the labor relations implications of the draft, it's necessary to keep the NBA from turning into soccer, which has no salary cap, no draft and relegates teams that perform poorly, in addition to paying teams more the higher they finish. It is the unrestrained free market, which incentivizes winning above all else, and Manchester United wins the title three out of every four years. We know we don't want that, so we have the draft, which compels the Lakers, for instance to allow their crushing economic advantage to count a little less in the interest of having someone to play. In much the same way, we're compelled to pay a graduated income tax in the interest of schools and roads and military protection being good for everyone, not just the rich.

I think The Wheel is kind of stupid because it's a radical solution to something that isn't really a problem. But the NBA faces a particular set of circumstances that the NFL avoids through sheer force of numbers and baseball and hockey through the near-total uncertainty of how amateur players' skills will translate to the pros. Only in the NBA can one player make your team, and only there do you have a pretty good idea of how that player's going to play.

But if you accept that actors are rational and tanking is bad, The Wheel is a solution. It took almost 50 years for people you'd think would be smarter than this to realize what drives tanking, and that you stop it the same way you stop any objectionable behavior. NBA general managers are immensely intelligent, savvy, thoughtful people. They're not going to act the way you want them to unless they want what you want.

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