Wednesday, March 17, 2010

SUNK COST

Wikipedia says the following about sunk costs:

"Sunk costs are past costs that have already been incurred and cannot be recovered.

"Traditional economics proposes that an economic actor not let sunk costs influence one's decisions, because doing so would not be rationally assessing a decision exclusively on its own merits.

"Evidence from Behavioral economics suggests this theory fails to predict real-world behavior. Sunk costs greatly affect actors' decisions, because humans are inherently loss-averse and thus normally act irrationally when making economic decisions."
This brings me to Jeff Suppan.

The money that the Milwaukee Brewers owe Jeff Suppan is a sunk cost.  They have no way to prevent paying it.  Yet there are all kinds of people in Internet Nation who think that the Brewers must keep Jeff Suppan because of his contract.  These people are thinking irrationally.

There is not a single shred of evidence to suggest that Jeff Suppan is going to be an asset to the Brewers this season.  In Bill James' Gold Mine he says, "The cinematic equivelent of the last five years of Jeff Suppan's career would be the boxer who's felled by the slo-mo knockout punch."

Year Wins ERA AVG OBP SLG
2005 16 3.57 275 335 428
2006 12 4.12 277 343 440
2007 12 4.62 298 356 445
2008 10 4.96 298 361 483
2009 7 5.29 309 387 512

This spring Suppan has given up 12 hits in 9 innings pitched, including 5 home runs, and sports a 7.00 ERA.

If the Brewers are thinking rationally, they will cut Jeff Suppan.  If they think they must keep him simply because of his contract, they could be - well... sunk.

2 comments:

KL Snow said...

You have OPS in the chart above where I think you meant OBP. If Suppan was holding opponents to an OPS under .400, we wouldn't be complaining.

Scott Segrin said...

Good catch KL - and very true. I fixed it.

 
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