Thursday, June 10, 2010

Economist's Notebook: Game Theory and Athletic Conferences

In my Managerial Economics class this term we studied strategic interaction in great detail.  We saw how one player's actions can affect others' payoffs and how players can gain advantage through being first movers and making credible commitments.

I thought of all of this today as the news that Colorado has agreed to join the Pac 10 hit the news sites.  This decision by Colorado is likely to set of a cascade of movement across the Big Ten, Big 12, Big East and Mountain West conferences.

Colorado's decision to join the Pac 10 may seem abrupt, but they have employed a classic strategy and gained the first-mover advantage.  You see, there is widespread speculation that Texas, Texas A&M, Texas Tech, Oklahoma and Oklahoma State are going to join the Pac 10 and politicians in Texas were starting to make noise about preventing the Texas schools from joining the Pac 10 unless Baylor was included as well.  As the Pac 10 does not want more than 16 teams, this would have left Colorado out.  Seeing that this was changing the strategic landscape and not wanting to be left out in the cold, Colorado jumped first and gained the first mover advantage.

Now, every other team and conference's payoffs have changed and I expect to see some pretty swift defections right away.  Apparently Nebraska is about to leave the Big 12 and join the Big Ten (which will then become, humorously, a 12 team league).  Missouri may follow suit.  This leaves Kansas, Kansas State, Iowa State and Baylor without a conference and I imagine that the Mountain West which is employing a different strategy - wait and let the payoffs change to the point that you become an attractive option - will open up its arms to these schools.

If I were the Mountain West I would bring on board these four schools and Boise State pronto in the hopes of becoming a BCS conference.  But Kansas basketball battling it out in places like Ft. Collins, Reno, Provo, Laramie and Albuquerque?  Weird.

The most interesting piece is the play of Notre Dame, which has a lucrative deal for its independent football team but risks the rest of its sports getting lost in the conference shuffle.  My bet is that they end up in the Big Ten along with Nebraska, Missouri, Rutgers and one other - Syracuse maybe?

Anyway, this is all an incredibly high stakes game being played at the moment and it is fascinating to observe as a student of game theory.   The one player in all of this that does not seen to have any kind of winning strategy is the Big 12 conference.  It looks like a goner for sure.  Like I said, weird.

Don't know if this is a net positive or negative for Oregon State, but it hardly matters, the status quo is gone.  Little tiny stadiums like those in Corvallis, Pullman and Palo Alto are going to look awfully puny if Austin, Norman, College Station are added to the mix (all over 80,000 capacity).  And now there is the real prospect of two orange and black OSUs in the same conference...

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