Tonight, while frantically trying to refresh Twitter to see the results of the NBA Lottery, I was struck by Devin Booker’s not so pleased reaction when he realized the Suns would fall from their #2 lottery slot to the #4 pick.
I get it. It’s not fun to move down when you’re hoping for a chance at Markelle Fultz or the Lonzo-Lavar pairing (yikes, good luck Lakers). Devin Booker expressed the initial disappointment that originates from losing out on something better.
But, technically, any sense of disappointment should dissipate quickly or shouldn’t be there at all. Devin Booker and the Suns should actually be happier than all of the lottery teams that will draft behind them.
Ok, so initial reaction to that is well, duh! Of course they should. They have a higher draft pick than any of those teams. But that begs a question. Why was Devin Booker upset and every team behind the Suns responded tepidly? It’s all about expectations and loss aversion.
I admit that I am not an expert in behavioral economics. The extent of my experience is reading Daniel Kahneman’s Thinking Fast and Slow (a good read but fairly dense). When I thought about Booker’s response, I immediately thought about loss aversion (also known as prospect theory).
We value gains and losses differently. We fear losing more than we enjoy winning. Therefore, in situations where losses and gains are both possible, we feel the pain of a loss more acutely than the thrill of winning. This isn’t rational, but as Kahneman and his research partner, Amos Tversky, so brilliantly explained over the course of their careers, human minds don’t always act rationally.
So the Suns are feeling the pain of losing out on better picks, a pain other teams are not enduring tonight. This begs a second question. Should the Suns feel like they lost something?
We know that the NBA slots teams in the lottery by their likelihood of tanking into the first overall pick. The Suns had the second worst record in the NBA and thus the second highest odds to grab the #1 pick. Therefore, the #2 overall pick became the Suns’ benchmark. Any movement below the #2 pick would be worse than their expectations.
This is another example of prospect theory at work. We tend to overvalue events with low probabilities and think they are more likely to occur than in reality. Consider the likelihood of the Suns moving down, as shown in the table below.
With the #2 lottery slot, the probability of the Suns moving up to the #1 overall slot was 19.9% compared to the likelihood of staying at #2 at 18.8% and the likelihood of moving down at 61.3%. The most likely outcome for the Suns was that they would move down, not stay put or move up. Under this premise, it doesn’t make sense to place your anchor at #2, especially since the most likely pick for them to receive was the fourth pick, which is what happened.
So what does this tell us? If you’re slotted in the top four in the NBA lottery, it’s unrealistic to expect to stay in your slotted position. Not until the seventh lottery slot is it more likely than not to stay put. Any disappointment in moving down is created by anchoring yourself to a slot number that doesn’t reflect the actual probabilities associated with the possible outcomes.
To optimize my net emotions (i.e., gain from winning – loss from losing), give me the #14th slot, though there is the pain of just missing out on the playoffs to consider. At #14, I can’t move down! However, if I want more than a miniscule shot at the #1 overall pick and also want to minimize my losses, lottery slot #4 is optimal. It has the highest likelihood of moving up in the lottery at 37.8% and a lower probability of moving down (i.e., causing pain) than the first three picks.