One of my goals when working for the Man was to achieve a level where people below me would say, “I can’t believe that moron is making that much money.” That would have been a great sign that I had maxed out my ability. Sadly, as far as I know, I never hit that goal (though perhaps my staff would disagree…).
Seeing people of modest ability in extremely high and well-paid positions isn’t surprising. As frustrating as it might be as you gaze upwards with envy, there’s a good reason to richly reward people at the top. (Hint: it has a lot more to do with your envy than it does their ability.)
Tournament theory, introduced by Lazear and Rosen, helps explain. It views advancing through a company as a tournament of sorts. Your promotion isn’t so much based on your absolute merit, but rather on you being better than the other candidates. When you win each stage of the tournament, you make more money and, importantly, get ever closer to the brass ring of CEO.
By offering rich rewards at each stage of the tournament, you incent people to work really hard to win.
So if your CEO makes an insane amount of money and seems rather incompetent, remember that his/her pay package isn’t a reward – it’s the end of a long line of incentives to keep you working hard. That should make you feel better.
What About Luck?
Tournament theory even addresses the fact that sometimes luck (gasp) is involved in promotions. It turns out that even if luck is a factor, as long as the prizes are rich, people will work hard to win.
If I’m really good and the incentives are right, I think I can live in a world where promotions are 50% merit and 50% luck – I’ll just work really hard on the bit I can control to overcome any role luck might have.
However, when promotions seem to be almost purely luck and/or the rewards for advancing aren’t that high, the tournament loses its appeal to talented people. They can pick up their toys and join a different tournament – one based more on merit, one offering richer rewards, or both.
If you’re a highly talented person, you don’t want or need luck. Sure, you’ll welcome it if it comes a-knockin’, but an oversized role for luck means someone less talented than you could actually win. And that’s not cool.
Tournament Theory, Applied
That seamlessly brings us to the real purpose of this post. A public address from me, as commissioner, to the members of my fantasy football league.
Sidebar on fantasy football – for those who are new to fantasy football, it’s an imaginary world where you draft players from skill positions in the real NFL, and then your little fantasy team wins or loses based on their real-life performance. Yes, it’s as silly as it sounds, but we have to fill our free time with something, right?
Since there is a set number of NFL players, as you increase your league’s fantasy teams, it becomes harder to find talent. There are enough really good players to stack talent in an 8-team league. Things are a little harder with 10 or 12 teams, and that’s where most leagues sit. A few brave souls go up to 14 teams, but there’s stiff competition for the good players there. 16-team leagues are viewed as a bit too extreme, and that’s of course where mine sits.
Here is my message to all of the folks in my fantasy football league:
To: all CFFL teams
Thanks to everyone who’s confirmed they’re coming back for another season. However, I’d like to address what is now an annual tradition: the season-starting bellyaching from those folks who wish we had a few less teams. Every year I have to hear, “A 16-team league is really hard! I can’t find good players!! Waaaaaaahhhhh!!!”
When you joined the Charlie Foxtrot Football LeagueTM, you knew what you were getting into. All of you were curious to try a 16-team league, some of you were a little scared, and a few brave souls relished the challenge ahead. Over time, we’ve seen how entertaining and rewarding this format can be.
When you’re in an 8-team league, you may wonder, “Which of my superstar running backs will I start this week?”. In a 16-team league like ours, you may wonder, “Do I have a running back this week?”
Yes, it’s hard. Yes, some weeks the cupboard is bare. Yes, some seasons you may realize you forgot to draft a QB until it’s too late.
But here’s one little wrinkle you may have forgotten: everyone in the league is facing the exact same challenges you are. It IS harder to manage a team in a 16 team league. But by making things so difficult, we’ve created a tournament where talent wins and luck’s role is minimal. Few fantasy leagues can say that.
Perhaps we need to face the real issue: it’s not that a 16-team league is hard, it’s that a 16-team league leaves some exposed as fantasy football wannabees. Yes, I’m talking to you, Bruce.
If you want something easy, go join an 8-team powderpuff league. Or maybe you can host a rousing rock-paper-scissors tournament to reward your desire for random-chance “competition”.
If you’re ready for a real challenge, though, I’ll see you at the draft.
P.S. Pay me your dues.
Talent and Luck Are Stuck With Each Other
People tend to claim full credit for success and blame bad luck for failure. It’s important to remember that both play a role.
By considering tournament theory, and knowing the nature of the tournament you’re actually in, you can develop the right strategy and better understand any outcome.
If you’re really good, try to find a tournament where merit rules. If you’re not so talented, find one where luck is a major factor.
A mix of ability and luck is part of every game. Just remember the mix isn’t always the same!