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Economics (695)
ECO204Y5 (58)
Lecture

# Application of the Equal Margin Principle: Fantasy Football Auction Draft

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School
University of Toronto Mississauga
Department
Economics
Course
ECO204Y5
Professor
Kathleen Wong
Semester
Fall

Description
Application of the Equal Margin Principle: Fantasy Football Auction Draft Fantasy Football 101 - Each participant is a manager, belongs to a league: 12 teams - Each manager owns and manages a fictitious team, made up of real football players o “fantasy” team o Managers will own players from different NFL teams - Only rule: Each football player can only belong to one manager - Objective: to pick a team of star football players that will help you win in each week’s match-up - How to play: each week, pairs of managers will play their teams against each other o Your 12 players vs. my 12 players o All NFL teams play once each week o Cheer for your players, not for a NFL team o Hope that your players perform well  Each player’s performance earns you points  Better performance = more points for your team o the team that collectively scores more points wins that week’s match-up o Repeats weekly: your team plays against other teams o team with best win-record at the end of the season wins  money, bragging rights New Trend: Auction Draft - Process of picking players: auction - Everyone has “\$200” to bid on players o No one spends real money – hypothetical auction o No benefit from having leftover money - Expectation: willingness to bid more money on players who have a good track record or potential to bring you more points - How Much to Bid? o Yahoo forecasts the number of points earned by each player in the entire season  Projected fantasy points o Use own knowledge, stats to value individual player o Gauge how much to spend on each player Utility Maximization and the Equal Margin Principle - Difficult to find appropriate examples, requires knowledge of: o utility functions unknown o utility values unknown o preferences, incomes diff → diff budget constraints - but with the auction draft: o budget constraints: constant at \$200 o utility functions unknown, unnecessary o utility values for each player: correlated with projected fantasy points We can ask the following questions: 1. Do people satisfy the first condition that they spend all of their income? o No. 5/12 managers in the league did not o remaining income ranges from \$1 to \$3 2. Do they maximize utility, follow equal margin principle? o Compare how much they spent on their quarterback, compared to the rest of the players st o Q: with the 201 dollar, would they rather spend it on their quarterback or other players MU QB MU
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