Value and March Madness

Picking winners for March Madness isn’t always about picking the team you think will win.

Further, it’s not necessarily about picking the team which gives you the best chance of maximizing the number of points on your sheet.

Specifically, the smart ones in March are the ones whose choices give them them the best chance of outright winning the pool. It’s better to finish 1st in one pool and last in another than it is to finish 10th in both pools, after all.

Of course, many people know this, but if this theory intrigues you, I invite you to read the series of posts on Team Rankings. This is one of my favorite paragraphs, from a post titled “The 5 signs of crappy picking advice.”

• It completely ignores how your pool opponents are likely to pick. In bracket pools, there is no prize for getting a certain number of games right. The only way to win is to get a higher score than everyone else in the pool. Consequently, the picks your opponents make have a significant influence on your own odds to win the pool. For example, if two teams are equally likely to win the NCAA tournament, but one team is twice as popular a pick, then you are almost certainly better off picking the less popular of those two teams to win. This is a simple truth, but it’s going to be entirely ignored by all of the crappy bracket advice you’re going to read this year.

I agree 100%.

For example, in 2014, 28% of the public has Florida winning the national title. In a standard 1-2-4-8-16-32 scoring pool, where picking the national champion is a must, this means that even if you accurately pick Florida to win it all, you would still have to beat roughly a quarter of the pool on all of your other picks just to sniff first place. In large pools, that is quite a tall task.

Moreover, Florida’s true chances of winning it all run are an estimated 13% (Ken Pomeroy) or 14% (Nate Silver), which means that there’s not even that strong of a chance Florida wins the tournament to begin with!

Here are the percentages of people who are picking this year’s favorites (on ESPN), along with each team’s estimated probability of making it that far (first number is Pomeroy, second number is Silver). Teams in red are overvalued, while teams in green are undervalued.