Dealing with Leagues with Very High Inflation

Gypsy Soul isn't certain that he can apply my theory on auction inflation to his league:

Thank you for your help on this, however, it is still somewhat unclear to me as to how much to pay for a player when you take inflation into consideration. Mike has said he will usually stop before he reaches the full inflation bid price, but with a high rate of inflation there is consequently a large variance between the raw bid price and the full inflation bid price. So where in this gap do you choose to stop? Mike mentions in his post of March 10th that his "ideal freeze auction would see me turning $2 inflation profit per player." By this I assume he is saying he will bid to $2 below the inflation price and generally no more. Anyway, again thank you, and Mike as well, for all your help and I wish you good luck this season.

Gypsy Soul doesn't mention what his league's inflation rate is, but I'm guessing that it is probably somewhere in the 35-40% range. If that is the case, I addressed this problem back in 2007 when this blog was still very young. Leagues with inflation rates at or over 30% present an additional series of challenges that leagues with low or moderate inflation rates do not have.

I'd recommend going back to the article I wrote in 2007 to read a full synopsis of the quandary of high inflation. To summarize, it isn't enough in leagues like this to say that you want to turn a $2 profit per player because you could easily wind up buying two or three stud players for $130-150, cap out your team, and find yourself without enough bargains left in the endgame to compete.

Your best bet in this kind of league is to employ a modified form of Optimal Bidding and try to avoid buying more than one or two superstars at hyperinflated prices. A lot depends on your circumstances, however.

If you have a very strong freeze list, sinking a lot of your money into superstars might make sense. It's likely that you have a significant amount of value tied into your freezes, which means that it is also likely that you have more than a few dump chips that you can package to replace the $1-3 hitters on your team that don't work out.

It's more likely that your freeze list isn't that strong, though, and you should try to search for bargains in the middle. Most differences of opinion occur in the middle, and inflation spreads these differences out even further. As an example, if you believe that Mike Aviles is worth $15, Owner B believes he's worth $13, and Owner C believes he's worth $10, that's a $5 gap in Aviles' perceived worth. In a league with 10% inflation, the perceived gap is now $6 between three owners, which is only a slightly bigger difference. In a league with 30% inflation, the difference increases to $7. There will be enough players like this in the middle where you will buy a team, since 12-13 owners tend to have enough variance in their pricing that you will wind up buying a team, instead of simply cashing out early on a few stars.