Dear Northwestern Economics community. I was among the first to submit my bracket and I have already chosen all 16 teams seeded #1 through #4 to be eliminated in the first round of the NCAA tournament. In case you don’t believe me:
Now that i got that out of the way, consider the following complete information strategic-form game. Someone will throw a biased coin which comes up heads with probability 5/8. Two people simultaneously make guesses. A pot of money will be divided equally among those who correctly guessed how the coin would land. (Somebody else gets the money if both guess incorrectly.)
In a symmetric equilibrium of this game the two players will randomize their guesses in such a way that each earns the same expected payoff. But now suppose that player 1 can publicly announce his guess before player 2 moves. Player 1 will choose heads and player 2′s best reply is to choose tails. By making this announcement, player 1 has increased his payoff to a 5/8 chance of winning the pot of money.
This principle applies to just about any variety of bracket-picking game, hence my announcement. In fact in the psychotic version we play in our department, the twisted-brain child of Scott Ogawa, each matchup in the bracket is worth 1000 points to be divided among all who correctly guess the winner, and the overall winner is the one with the most points. Now that all of my colleagues know that the upsets enumerated above have already been taken by me their best responses are to pick the favorites and sure they will be correct with high probability on each, but they will split the 1000 points with everyone else and I will get the full 1000 on the inevitable one or two upsets that will come from that group.