Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Thursday, February 17, 2005

I'm Glad I Didn't Bet Any Real Money

On Tuesday morning I wrote to Phil Miller, co-blogger at The Sports Economist, that I figured the odds were better than 50-50 that there would be hockey this season. Then I got so bold as to post both there and here that "My Bet Is Yes". Obviously, I was wrong, and one of my other co-bloggers, Brian Goff , provides an interesting analysis of the events. I strongly recommend his analysis, both there and in his academic publications [e.g., see here, here, and here].

It must be clear that I was not the only one who expected the lockout to end. My contacts tell me that the players in the NHL had been informed by the NHLPA to expect that an agreement would be reached. Many of them told the coaches where they were playing or working out that they expected they would be back at work soon. Some quit or gave notice at their temporary jobs. In other words, many people expected there would be a deal. We all misunderstood the goals and strategies of Gary Bettman and (some of) the owners.

I think there is a good chance of a gloomy future for the NHL over the next few years. Fans will be truly angry at someone, and will tend to stay away for quite some time. Television contracts will be in jeopardy, even for ESPN42 or where ever the games might have been shown. Some players will defect from the union, once the impasse is declared and replacement players are hired, and that will anger fans even more.

Meanwhile, several fragile franchises will declare bankruptcy, and the league will shrink.

I realize that in a bargaining situation, it is important to try to convince the other side you are so irrational that you are willing to sacrifice a great deal just to prove a point -- sometimes called "the rationality of irrationality". But the value of that strategy assumes repeated plays of the game, in a game theoretic situation; and quite honestly, I doubt if Bettman will get another chance to play the game.

Given his tone and his duplicitous public statements, I certainly hope not.
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