February 29, 2012 posted by Patrick DiCaprio

The Risks of Trading Lemons and Cherries

Print Friendly

Evan Longoria, Tampa Bay Rays 3B

Back when I was writing for The Hardball Times many moons ago I wrote an article on trading and the risks inherent in the differing knowledge between trading partners. With the proliferation of fantasy statistics across the spectrum of fantasy sports, and doubly so in fantasy baseball, I wanted to revisit the idea presented.

Let’s start with this proposition from economic theory: suppose in a population of cars, some will be defective lemons and some will be reliable cherries. The owner of the car knows from repair bills which is which, however the buyer does not.

This disparity in information results in the market having many more lemons than cherries. Why? Anyone with a lemon will try to sell it but the owner of a reliable cherry will have little incentive to sell. So the market will have many more lemons than cherries and as Lenny Melnick is fond of saying, when you are trading it is “buyer beware.”

That this is true in all aspects of life, and particularly in baseball cannot be doubted. The intriguing part to me is the notion that the person accepting the trade for a possible lemon may think that he knows more than the owner of the lemon. Obviously if a person is willing to trade for a possible lemon he knows a) that the lemon is not a lemon but possibly a cherry or b) that he can alter the lemon somehow to make it a cherry.

In real baseball the assumption would be that the team has inside information, namely the players “repair bills,” that others do not. But what about fantasy players?

This is where sabermetrics comes in. If you are in a league with sabermetrically-inclined players and you are offered what appears to be a “sell high” trade from one of them, you can be sure that in his mind he is offering a lemon. One obvious example might be an offer of Jacoby Ellsbury or Howie Kendrick; a fantasy owner with knowledge of HR/FB rates is trying to sell a lemon for a cherry of the same perceived value as Ellsbury or Kendrick.

On the flip side, you may be willing to trade for a possible lemon because you know that the player is not really a lemon. You make a demand for what the other owner perceives as a lemon because you know he is really a cherry. Evan Longoria and his .239 BABIP is a tasty cherry if you can get him. Or maybe you can target possible cherries Kurt Suzuki or Alex Rios, to move further down in the food chain and be more realistic.

They most important thing for fantasy owners to remember is that when you are dealing and are offered a trade, you must determine why the player is being offered or demanded. If this requires you to go beyond your normal analysis then do it.

The second most important idea is that fantasy owners must be able to figure out when you have a lemon. This may be from a proper interpretation of the information you have, or an interpretation from a trusted source (like us!). The inability to know when you have a lemon can be the death of your team, as happened to anyone that owned Carl Crawford or Adam Dunn last year.

Thirdly, if you have a lemon, you must act quickly and try to deal it to an unsuspecting sap. An examination of a player’s hit rate, for example may inevitably lead to the conclusion that he is due for a big fall, or a pitcher may have been very lucky with stranded runners. These players are lemons and if there are non-sabermetrically-inclined owners you should offer them up as soon as you can, and don’t fight or hold out for “fair value,” whatever that means anyway.

Here we have sprouts from the seeds of a solid understanding of fantasy theory. In any war or conflict (and a trade is certainly a conflict in terms of the application of strategical principles) the winner can be divined from the gross amount of knowledge they have, their judgment, their knowledge of their opponent and the disparity in knowledge between the owners.

We must be cognizant of all factors that are capable of knowledge; if chance or randomness intervenes as it often will then so be it; the process it what matters. As Sun-Tzu would say, don’t fight the battle first and then look for victory.


You must be logged in to post a comment.