"The Winner's Curse"

Theo Epstein has some valuable assets working with him, and we can only hope that the GM has some Game Theory background. As a trader, I'd be shocked if John Henry didn't have some or perhaps read Richard Thal's book, The Winner's Curse.

Here's a little sample of Game Theory to ponder. How'd you like them applets?

David Marasco has more on The Winner's Curse.

I regularly discuss investing and the stock market at one of my other sites, and one of the most important principles in trading is similar, "buy 'em when you can, not when you have to." Most people tend to invest when the price is high, rather than when the price is low. We also tend to overvalue what is 'ours'.

A lot of free agent pitchers have turned out to be busts, for example Jaret Wright, Carl Pavano, and Matt Clement. Of course, Curt Schilling helped bring the Sox to the Promised Land.

Epstein and the Sox braintrust have apparently made a bold move in bidding high for Matsuzaka. We can only hope that we have not succumbed to the winner's curse.