An Economics Approach to New York, Chicago, and 2010 NBA Free Agency

June 4th, 2010 by Brian Chappatta Leave a reply »
In business it's called collusion. And it's illegal.

For NBA free agents, however, it's doing what it takes to win a championship. And it's 100 percent legal.

Sure, the so-called "free agent summit" featuring LeBron James, Dwyane Wade, Chris Bosh and others is not likely to happen. But if it did, which teams would ultimately win and lose from such a meeting?

Winner: New York. Loser: Chicago.

Who would have ever thought economic game theory could be applied to sports? Well it can be in this case. The determining factor in game theory is cooperation; whether other players know the payoff influence the decisions they respectively make.

Stick with me, because this will help explain the consequences of the free agent class working together to maximize their overall benefit.

Suppose James and Wade have no idea where the other is going to sign. Then they are each going to go to the place they think they'll have the best chance at winning a championship.

No disrespect to other franchises, but the Bulls are the best equipped to win right now with the addition of a superstar.

So in that case, the ...

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