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Game Theory in NBA Free Agency

An earlier post (https://blogs.cornell.edu/info2040/2017/09/04/networks-in-nba-rivalries/) mentions the parallels between networks and NBA rivalries. Game theory, another topic from class, is equally ubiquitous in today’s NBA. In determining their futures, players and teams are making sure to evaluate all their options and factor in the decisions of the rest of the league before coming to a conclusion.

Take, for example, the pending free agency of superstar Russell Westbrook. Westbrook is eligible to sign a 5-year, $217 million “supermax” contract extension to stay with the Oklahoma City Thunder, but he loses that eligibility and becomes a free agent next summer if he doesn’t sign by October 16. For now, Westbrook has chosen not to sign an extension because fellow all-star teammate Paul George is also set to be a free agent. If Westbrook signs his extension and Paul George also signs a new contract with the Thunder, the star duo would cash in while playing for a championship contender. However, if Westbrook signs the extension and George leaves, Westbrook is left without a star teammate. Although George has not committed to leaving or resigning, most experts believe there is a strong possibility that he will leave to play for the Los Angeles Lakers; because of the uncertainty of George’s future with the team, Westbrook is deferring his own extension and potentially risking tens of millions of dollars.

The recent Cleveland Cavaliers overhaul also exemplifies the prominence of game theory in today’s NBA. Despite going to three straight finals with the team, pending free agent LeBron James has been noncommittal about resigning with the Cavaliers, and just last week Kyrie Irving was traded from the team for Isaiah Thomas, another pending free agent, and a coveted first-round draft pick. With Isaiah Thomas and LeBron James both potentially able to leave the team next summer, the Cavaliers have to make a decision: do they make win-now moves or prepare for a potential future without LeBron James. The Cavaliers quandary boils down to how they use the first-round draft pick: they can keep the draft pick and leave the team essentially unchanged for the 2017-2018 season, or they can trade the pick for another star (such as Demarcus Cousins, another pending free agent) in the hopes of competing for a title and convincing the duo to stay. Leaving the team unchanged will most likely not influence LeBron’s decision positively; in contrast, the latter move would theoretically lead to the 2018 title and thus entice LeBron James and Isaiah Thomas to stay. However, even if the team wins a title, James’ could still sign elsewhere, leaving the team devoid of long-term potential. At this time, the team has not made a firm commitment on how they will use the draft pick, but they will no doubt consider LeBron’s potential decisions in their own decision.

Sources:

Westbrook/George:

http://bleacherreport.com/articles/2719299-russell-westbrook-reportedly-may-delay-signing-contract-after-paul-george-trade

Cavaliers:

http://hoopshype.com/2017/08/22/how-much-will-nets-draft-pick-help-the-cavaliers-after-kyrie-trade/

 

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