Valuing On-Base Percentages in MLB Market
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I found most interesting how the majority of MLB teams undervalued on base percentages. Getting runners on base is most important in scoring runs. A walk is as valuable as a hit because both are getting on base.
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What did you find most interesting in this chapter
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The valuation of skills in the market for baseball players was grossly inefficient.
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What does Michael Lewis argue that the Oakland A's realized but other MLB team did not? Be specific
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Ordinary Least Squares
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What does OLS stand for?
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To choose the line that minimizes the sum of the squared distances between the points and the line
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What is the objective of OLS?
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Closer to zero
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The standard error is used to determine how much confidence we have in the estimated results. To have more confidence, what would one like the standard error number to be
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Look for a standard error that is no more than half the size of the coefficient.
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To have more confidence in the estimated results, what is the standard error "rule of thumb"?
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True values of both the constant and the slope are not zero
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To have more confidence in the estimated results, what is the t-statistic "rule of thumb"?
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how much of the variation in the dependent variable can be explained by the explanatory variables in the regression
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The "R squared" or R2 is a measure of:
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(economics degree from Harvard where he played football and baseball).
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The authors test on basis insight of Bill James that was implemented by the Oakland Athletics management team of Sandy Alderson, Billy Bean and Paul DePostesta
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Slugging percentage
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What baseball statistic do they say was overvalued?
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On-base percentage
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What baseball statistic do they say was undervalued?
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Getting a walk
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What batter productivity information did they believe is ignored by the commonly used stat?
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The ability to get on base
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The essence of the Moneyball hypothesis is that what is undervalued?
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On-base percentage makes a more important contribution to winning games than slugging percentage.
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What is the main point of the tables: A. Table
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Salary is generally determined prior to performance and based on expected productivity given observed performance in previous years.
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What is the main point of Table 2?
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Dependent variable is salary
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What is the main point of Table 3? What is the dependent variable, that is what is being explained
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Shows that estimated returns to on-base percentage and slugging percentage evolve over this period.
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This is the key table(3)—what does it show? Be clear why this is evidence in favor of the argument
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Things are undervalued more than they should be.
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Although Moneyball is about baseball and sports, the author, Michael Lewis, is a journalist who writes about financial markets. Most of what we'll do in this class will illuminate the world of sports but even more importantly is to understand more generally the functioning of markets. What is the larger significance of this story for the U.S. economy, markets, industries, businesses and, of course, beyond the U.S.?
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The research project that I am interested in pursuing is whether the Moneyball concept was actually successful or not.
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Based upon these readings, what research project are you interested in pursuing? Or what question or idea would you like the class to discuss?
