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LeBron and Game Theory

As a Clevelander and a basketball fan, I loved watching the Cavs play. Like the rest of the city, I was thrilled when LeBron James wound up on the Cavs. I watched 7 seasons filled with amazing plays and spectacular dunks. Not surprisingly, I was disappointed when LeBron decided to leave Cleveland and very unhappy with the way he chose to do it.

The site listed below discusses the decision of LeBron, Dwayne Wade, and Chris Bosh in terms of game theory. The situation was simplified so that there were only three options and the three players. Each player could remain in their own city (Cleveland, Miami, and Toronto, respectively) or move to one of the other two cities. Several factors played into the payoff of each decision, including salary, the chance of winning a championship, the quality of life in that city, and not having a reputation as a villain. The salaries would be comparable in each city, so this does not affect the relative payoffs much. The chance of winning a championship would increase the more of the three that play for the same team. LeBron would see the biggest decrease in payoff from being seen as a villain if he left Cleveland, but the other two would have a smaller decrease if they left their cities. The quality of life in Miami is the best, although since James has family and friends in Cleveland, his quality of life there is also pretty good.

It would be interesting to see how this situation would have turned out if all three had to make their decision simultaneously without talking with each other. Since Bosh and Wade made their decisions first, LeBron had to choose the best outcome given the decisions of the other two. The payoff of moving to Miami was the best outcome, even though he was paying a high “villain” price. All three moved to Miami, even though the optimal move may have been for the three to move to Cleveland.

Another game that models part of the situation is one involving the timing of the players’ decision. The factors involved in LeBron’s payoff for choosing earlier were that he could pick the city he wanted and possibly influence the others to join. Being in the spotlight for longer was a factor for waiting. For the other two, deciding sooner may allow them to influence LeBron to join them and deciding later wouldn’t have much benefit. To LeBron, the payoff of the spotlight was better than the payoff of choosing sooner. This outcome resulted in LeBron having to pick the best outcome given the decision of the other two, as described above.

http://www.britannica.com/blogs/2010/07/did-lebron-james-get-played-game-theory-and-the-big-3/

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